A KuCoin user has accused the cryptocurrency exchange of profiting from filters that occur when users are unable to access the website.
“KuCoin is using Cloudflare to block access to the website during large price movements to profit from liquidations,” said Reddit user HammondXX.
Previously a data center designer, the current cryptocurrency trader became “worried when I saw them using technology I know well to try to steal people’s money through liquidation.” He explains that Cloudflare is used to stop DDoS attacks and delay traffic to back up servers when they are overburdened. Then a Reddit user provided a screenshot of KuCoin blocking access to their website during peak period using Cloudflare.
HammondXX then accuses KuCoin of “treating all of its customers like a DDOS attack and saving money for not having a redundant web server on AWS.” It also indicates that enterprise requests are still processed over OTC, when servers are down. In addition to minimizing the IT infrastructure, he says, KuCoin then takes advantage of filtering processes that occur as a result of users being unable to access the website.
Although he was banned on KuCoin’s Reddit page after raising these issues, his position rose on the profile enough to get a response from the exchange’s CEO, Johnny Liu. The CEO addressed these issues in another Reddit post.
First, Lyu acknowledged using Cloudflare to prevent DDoS attacks, adding that all major exchanges use it similarly. Then Lyu points out that these exchanges apply the access frequency limit. In the case of KuCoin, Lyu commented on discussing the matter with high-frequency traders. However, once the limit is exceeded, access may be denied intermittently. Although he thought this wouldn’t affect most users, Liu said, “It’s possible that when there’s a big price move or someone visits the site very frequently, 504 pages may still appear due to restrictions.” India’s largest crypto exchange faced similar difficulties earlier this year.
After that, Lyu disputed HammondXX’s claim of not spending enough on IT infrastructure. “Compared to other exchanges in terms of size and scale, our investment in AWS servers is twice theirs,” he said. “And we will continue to invest in this sector because we know that this is one of the fundamentals of our services.” Regarding the final charge, Lyu declared that “as a neutral platform, we do not profit from user liquidation.”
In a later post, HammondXX acknowledged Lyu’s response, but felt he fell short of addressing the real issues, calling Lyu a “prankster”.
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