The current Crypto Winter is littered with the corpses of companies that rose to prominence by offering risky products, from margin trading on FTX to so-called "earn" rewards on Celsius.

In the aftermath of FTX’s bankruptcy, crypto watchers on [hotlink]Twitter[/hotlink] set their sights on to KuCoin, the world's fourth-largest exchange by trading volume. Critics spotted a potential time bomb in the form of KuCoin's complex options product called "dual investment," which let customers earn interest rates as high as 300% for depositing cryptocurrencies.

“What is happening on Kucoin?” wrote one popular crypto Twitter account, with a screenshot of the astronomic rates. “Is this a glitch or what?”

The high rates on KuCoin recalled the glory days of now-disgraced platforms like Celsius and BlockFi, where users were promised seemingly impossible returns for holding cryptocurrencies. Those rates, of course, did turn out to be impossible.

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In an interview with Fortune conducted in Mandarin through a translator, KuCoin CEO Johnny Lyu defended the exchange’s product, arguing that it's different from other earn products and that KuCoin provides adequate warnings to its users.

If customers use the products after being notified of their risk and then engage in “reckless behavior,” Lyu told Fortune, “the only thing we can express is regret.”

With "dual investment," users purchase an options contract, meaning they commit to sell or buy a cryptocurrency at a future date for a target price, earning interest in return. The product is non-principal-protected, meaning users may receive less than they initially put in, which explains the high premiums but also the relative risk compared with earn products on other lending platforms.

With the rise of platforms from FTX to Robinhood, retail investors have had increasing access to complicated derivatives products like dual investment, leading to massive losses for inexperienced traders. The volatile nature of crypto, and the dangling of high yields, only heightens the danger.

Lyu said the only responsibility of a platform like KuCoin is to lay out the possible risks to its users, which it does by labeling dual investment with an “advanced” tag and including an FAQ at the bottom of the product page explaining how it works.

Scott Lewis, the co-founder of the decentralized trading platform Slingshot Finance, said that the product is still misleading because it obfuscates prices from users relative to the better rates they could get directly from derivatives markets.

He pointed out that the dual investment product is listed under the “earn” tab on KuCoin’s website, rather than the “derivatives” tab, which he argues is misrepresenting the product. In other words, it is targeting unsophisticated speculators—a reality not solved by an FAQ.

“The disclaimer is not complete until it discloses that the product is a huge ripoff,” Lewis told Fortune.

The dynamic is certainly not limited to KuCoin, with Binance also offering a dual investment product with similar interest rates. That did not stop Changpeng Zhao, the CEO of Binance, from tweeting that users should beware of platforms that “offer high APYs,” which many took to be a dig at KuCoin. After users pointed out that Binance has similar products, CZ deleted the tweet.

(Lyu told Fortune that the tweet was not about KuCoin because the exchange offers APRs instead of APYs, although the only major difference is that interest compounds with APYs.)

The flare-up over KuCoin’s dual investment product also came with concerns over solvency, with Lyu releasing an open letter dispelling the rumors and promising to release a Merkle tree proof of reserves. On Monday, the exchange also announced that it was engaging with the accounting firm Mazars to provide a third-party “factual findings” report.

Many in the crypto industry have said that a proof of reserves release is not sufficient without an accounting of liabilities and a third-party audit. KuCoin’s announcement about Mazars only said that it would provide additional transparency and reporting on whether customers’ “in-scope assets are collateralized.” It is unclear if this process will constitute a full third-party audit.

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In his interview with Fortune, Lyu said that KuCoin would be releasing a proof of liabilities, although he did not provide a timeline, saying that it would take “more time” to complete the necessary accounting.

On Nov. 29, Sen. Ron Wyden (D-Ore.) sent a letter to KuCoin and other major exchanges, requesting information including the firms’ balance sheets and their policies in the event of a crisis such as bankruptcy.

Lyu told Fortune that KuCoin is still waiting to confirm with its legal team that it received the query, but did not commit to providing the information, saying that KuCoin is incorporated in Seychelles, not the U.S. Instead, Lyu said that KuCoin is focusing on releasing its Merkle tree proof of reserves.

“All the efforts that we’re making right now are non-related to any specific country, or requirements and queries from a certain country,” he told Fortune. “This is what we believe is reasonable and correct."

This story was originally featured on Fortune.com

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