Dear Solarians,

As most of you may be already aware, KuCoin has announced that Solaris XLR will be delisted from their platform on 31st of August, 2019, with trading ceasing on the 31st of May. Source

In this article we would like to go into the reasons for the delisting and also underline gross malpractices that we have experienced since the very beginning when XLR got listed on KuCoin.

How XLR got listed on KuCoin

It is important to start at the very beginning as the KuCoin incompetence also started here. As some of you may recall Solaris was part of the 2nd “Vote For Your Coin” competition which started on December 20th, 2017 (source). With the help of our amazing community, we managed to clinch a victory on the 26th of December, and win a listing on their platform (source).

This was a great achievement for everyone involved with XLR, but this is also were the KuCoin incompetence begins to show. They listed XLR without doing any Due Diligence at all:

Solaris team never signed an NDA (This is why we are doing this article)

Solaris team never signed a listing contract (We will come back to this caveat later)

Things didn’t start out all that bad, we enjoyed some positive months of trading on KuCoin at first, but soon we discovered how incompetent their team was at that time.

April 18th, 2018 — The First Technical Incompetence

Solaris was coming up to a major change, moving from Proof-of-Work to a Proof-of-Stake consensus mechanism, which was slated for April 16th. As the Solaris blockchain moved to the new consensus protocol, due to unforeseen technical issues the blockchain stopped producing new blocks, causing the team to instantly work on an emergency wallet release to fix the issue, released on 17th of April. After the release of the new wallet, we contacted KuCoin informing them of the Proof-of-Stake change and sending them the wallet to update on their platform.

This is where the problem starts. KuCoin were clearly not familiar how Proof-of-Stake wallets work and their engineers were not familiar with the implementations of the wallets. After updating the wallet on their platform, they allowed it to stake causing issues with their internal database. This issue caused “imaginary” deposits to arrive to users wallets that previously held XLR. Some users reported that as much as 6k XLR (43k USD at the time of writing) got credited to their accounts out of of the blue. Subsequently, a lot of these people just started dumping their newly created balances straight into the market.

Unfortunately this happened in the middle of the night in Europe, meaning we did not find out that something is up until approximately 4 hours after the incident. We reached out to KuCoin immediately upon seeing that something is wrong and a number of users reporting that they got these XLR deposits credited to their accounts.

KuCoin were of course oblivious that anything has happened at all, fortunately they set up a group chat with our team and their management and technical people. We requested that they should immediately turn off the deposits and withdrawals, and halt all trading to minimize the damages. While they did turn off the wallets approximately half an hour after our request (source). At this stage more than 320k USD of XLR got market sold on the exchange. It took them another 2.5 (source) hours to finally close trading because they had to perform “Technical Analysis first”, during this time another approximate 150k USD worth of XLR got dumped on the markets. Please remember, that NONE of this XLR actually existed in the KuCoin wallets, it was all imaginary.

After closing the markets the communication went dark until next morning when we received this message:

As you can see, KuCoin calculated that over 68k of imaginary XLR got credited to user accounts and then dumped on the market. And what do they expect? That we pay it all back to them. For what reasons? Because we didn’t provide a “tech-manual” for the update, which no one ever told us to provide in the beginning. This also begs to questions why perform an update without the supposed Tech-Manual if this is the process they have in-place?

Regardless, we pushed back and said we won’t pay that amount for their incompetence… they reply was that we cover 70% of the damages with this message:

At the end of the day we agreed to cover 50% (34178.7444 XLR) of the damages caused by their team as frankly we did not see another option at that time without getting delisted from KuCoin. These funds amounted to about 40% of the Developer Fund which was used for various initiatives and development of projects around Solaris at the time.

In retrospect, this was not a good decision as the malpractices only get worse. We also prepared a statement regarding this situation, but KuCoin insisted to review it personally and that we redact any details from the statement that puts them in a negative light.

June 28th, 2018 — Second Technical Incompetence

Roll on just 2 months later, and we wake up to another massive dump of the price and users reporting that XLR got randomly deposited to their accounts. This time there was no Solaris wallet updates or anything at all that KuCoin could blame us for… and this is the conversation we had with them after getting reports from users:

It seems like this time they realised their mistake quicker, closed the markets before too much damage was done and then had zero communication with us regarding what exactly happened as you can see in the screenshot above. No explanation, and no communication or even a word of apology for crashing our price again. At least they did not have a nerve to ask us to cover the damages again.

We estimate that another 5k to 10k of imaginary XLR got dumped on the markets as seen here:

December 2018 — Beginning of the “ST” category abuse

KuCoin has a Special Treatment category where projects are placed before they may get delisted. You can read about their ST category here: Source

KuCoin have made sure to not include the most important reason why they place projects under ST category. They request the projects to keep up a liquidity requirement average of 5 BTC per day, which very much sounds like “wash trade on our exchange, or risk delisting”.

Here is the exact email we received every Monday morning when there was an ST flag on XLR: