September 25, 2023

Fcoin exchange closed without returning $ 127 million in bitcoins to users

Fcoin exchange closed without returning $ 127 million in bitcoins to users

Zhang Jian, the founder of FCoin, the Chinese cryptocurrency exchange, said the platform stopped operating due to a deficit in the reserve fund for payments to users of approximately $ 127 million.

In the announcement, he said that the platform will not be able toreturn to its users from 7000 to 13000 bitcoins due to internal technical problems. Zhang Jian claims that the exchange was not hacked and the funds were not stolen by fraudsters, but they cannot be returned due to the nature of the project system.

The problem is with the FCoin business model, which provides Remuneration of users with exchange tokens (FT) for transactions in the amount of 100% of the fees paid, as well as the distribution of 80% of the fees for operations on the site among FT holders.

Although initially many cryptocurrency exchanges and expertscriticized this scheme, calling it a financial pyramid, but the project quickly became popular. According to Zhang Jian himself, erroneous decisions were made due to the growth in trading volumes and the lack of internal audit, which ultimately led to the fact that payments to users began to exceed exchange earnings.

Currently FCoin details are stopped, and the founder of the platform will personally make a decision at the request of each user for withdrawal of funds.

Nevertheless, Zhang Jian said that he plans to launch new projects, the profits from which will be directed to compensate for the losses of exchange users.

Such platforms are becoming popular because, according to the study, for crypto traders, a demo account and low fees are more important than exchange security.