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A substantial amount of ethereum (ETH), valued at tens of millions of dollars, was sent to the ethereum burn address in a series of unusual transactions conducted by Kucoin in 2021.
Conor Grogan, head of product at Coinbase, discussed the transactions with 23,000 of his followers on Twitter.
Thousands of Kucoin deposit addresses sent $10s of millions of dollars of ETH to the Ethereum burn address
— Conor (@jconorgrogan) May 30, 2023
This was back in September '21- I don't think anyone ever noticed 🤷♂️
If you've ever wondered why the null address has so much ETH in it, now you know pic.twitter.com/JPBgxGGOVl
Within blockchain technology, the ethereum burn address, often called the null address, is a metaphorical black hole. Tokens sent to this address become irretrievable, effectively removing them from circulation, commonly known as burning.
Given the exchange’s holding of substantial digital assets for traders, such a transaction raises concerns. However, the exact reasons behind this move remain unknown, as no concrete information has emerged to shed light on the circumstances that led to this situation.
The unexpected burns occurred over three days, commencing on September 7, 2021, and involving over 3,500 transactions of USDT (tether) and ETH.
One theory suggests that KuCoin may have entered into a one-time agreement with Bitfinex, the entity behind tether, to redeem USDT, supported by the available evidence. However, this argument must adequately explain why ETH was sent to the burn address.
Another theory proposes that this peculiar asset reshuffling could have been caused by a system malfunction or an oversight in the operation of an automated system. Despite several hypotheses, why KuCoin would burn such a substantial quantity of ETH remains unanswered. The mystery continues to baffle observers within the crypto community.