- FCoin to shut its doors, 7000 BTC – 13,000 BTC to be unpaid
- Worry not, Tron founder Justin Sun is here with BTT in exchange for Poloniex’s sign-ups
FCoin customers are losing nearly $126 million in what could be an exit scam and founder Zhang Jian says the problem with the exchange “is a little too complicated to be explained in a single sentence.”
Better yet, he’s got an analogy for this, “the FCoin ship hit an iceberg as soon as it set sail in 18 years. Although the ship did not sink immediately due to the large ship, the open mouth was in the decision error at full speed was getting bigger and bigger, which eventually caused the ship to sink in early 20’s.”
The former Huobi CTO launched the exchange in May 2018 with a model called “trans-fee mining” to incentivize trading. Its native token FT’s 51% supply was issued to the public in exchange for making transactions and further distributed 80% of the transaction fees to FT holders.
Now, the exchange is processing users’ withdrawal request but its asset reserve has fallen short of its liability, a gap of 7k to 13k BTC.
Users to Lose Over $126 Million
In the official announcement on Reddit, Jian says the capital reserves can not be paid and the internal and technical difficulties are the result of “financial difficulties.” Because of this, the scale of customers funds that won’t be paid is 7000 BTC – 13,000 BTC (currently worth between $67.9 million and $126.1 million).
As per his explanation, in mid-2018 the platform saw a “large influx of users” because of transaction mining and 80% of the income dividend. Reportedly at one point “ a day’s dividend was as high as 6000 BTC,” which he said was the “beginning of a disaster.”
Amidst too much activity and business apparently, they made mistakes but didn’t catch it in the time leading to a loss of $10-20 million dollars.
As for why there weren’t any stronger measures introduced, “FCoin is too precocious, and no one gave him the opportunity to grow him slowly before he was well developed,” reads the translated version of the Jian’s Chinese announcement.
Meanwhile, Founder Off to Personal Project
He also has much love for the community and “even willing to pay everything for” them but Jian says he used his “entire income” to buy back FT and even urged other members of the team to do the same.
The current assets with the platform are not enough to pay the users, as such Jian will be dealing with who will be allowing how much to withdraw.
Moreover, Jian himself is switching the tracks but says, he will use the profits from this new personal project to compensate everyone for their losses which could take as much as one to three years.
An Exit Scam?
Jian might have been trying to have a heart-to-heart but according to Dovey Wan, founder of Primitive Crypto, it was just “A ponzi exchange founder (writing) about his exit scam.”
Wan notes that FCoin’s bitcoin cold wallet shows that the majority of their assets have been transferred to other exchanges which was 48hr before Jian’s official announcement.
“Responsible for the end of your life,” is how Jian concluded his “The truth of Fcoin” note/ announcement.
But this proved to be too good of an opportunity to miss for Tron founder Justin Sun who while feeling bad for his “close friend” announced 1000 free BTT for Fcoin users who sign up on Poloniex.