Crypto Exchange FCoin Cannot Pay $125M it Owes its Clients
Main page News, China, Cryptocurrency Exchanges

Chinese crypto trading platform FCoin, which last week suspended its operations apparently due to internal conflicts, has just reported it does not have enough funds to pay back the $125M it owes its clients.

According to Zhang Jian, the exchange's founder, FCoin cannot process its clients' withdrawal requests because it may default on 7,000 to 13,000 BTC (about $67 million to $125 million) of user funds.

Although Jian has stressed the problem was not caused by a hack or a scam, data shows it actually could be that.

Cryptocurrency exchange FCoin was founded back in May 2018 by Zhang Jian, former CTO at Huobi. The company focused on a new business model based on trans-fee mining. FCoin even issued its own FT token. 51% of the tokens were used to return 100% of the transaction fees to users. Users were encouraged to make transactions as often as possible, as the platform reimbursed 100% of the transaction fees they paid on FT tokens. 80% of the daily transaction fee income was given back to users.

Jian said the problem was caused by an internal system error, which for quite some time had been returning more funds than it should to users participating in the transaction mining program. This happened until mid-2018, but FCoin did not carry out a full audit of its platform until mid-2019, so I could not identify the problem earlier.

Jian has promised he will personally manage all withdrawal request; he estimates the entire process will take 2-3 months. In addition, he plans to launch a new project. According to him, he will use profits from the project as well as his personal funds to cover FCoin users' losses.

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