Chinese Exchange Fcoin Closes, Still Owes Users $125 Million

The latest Bitcoin scam news show that scams can even come from an exchange. The simple example is the Chinese exchange Fcoin which recently revealed that it may not be able to pay the 7,000 to 13,000 in BTC (around $67 million to $125 million) that it owes its users.

According to Zhang, the exchange has not been hacked and is not an exit scam. Still, evidence suggests that it might be exactly that. Zhang claims that the shutdown is a result of series of internal data errors and decisions which are too complicated to explain. As he said:

“This is a problem that is a little too complicated to be explained in a single sentence, the time span is also large, and the two story development lines are advancing and affecting each other at the same time, leading to the final outcome.”

The Chinese exchange Fcoin is now in the cryptonews. After its launch in May, the reported trading volumes became some of the biggest in the world overnight thanks to a new business model called “transaction mining.” Later on, one Reddit user reported that this volume was actually fake – which is when the problems started.

The exchange was later on described as a scam by many and the suspicions about its business model turned out true. There was no airdrop nor ICO at launch and the Chinese exchange Fcoin distributed 51% of its native tokens to users for reimbursing transaction fees.

The CEO of Binance, Changpeng Zhao, has publicly called FCoin a Ponzi scheme since the middle of 2018, commenting on Zhang’s post in a tweet which read:

“I rarely called out anyone, with exceptions. On Chinese social media, I called FCoin a pyramid scheme in mid-2018. Their founder calls his own plan a “better invention than #Bitcoin“. That did it for me. Who would say such a thing? About themselves? Except scammers.”

I rarely called out anyone, with exceptions. On Chinese social media, I called FCoin a pyramid scheme in mid 2018. Their founder call his own plan a "better invention than #Bitcoin". That did it for me. Who would say such a thing? About themselves? except scammers. https://t.co/oNbZyDDkZe

— CZ Binance 🔶🔶🔶 (@cz_binance) February 17, 2020

To this, Zhang replied saying that there have been some errors which the Chinese exchange FCoin detected – but did not explain why it failed to address such problems before it is too late.

‘With the deepening of the investigation, we found a large number of existing data problems of dividends and mining returns, and these problems have existed for many days. As a result, a large number of users have already been through operations such as buying and selling various currencies and withdrawing cash, causing the pollution of assets.”

The platform was suspended a few days ago by its own account for risk control, which caused a lot of speculation that the project was shutting down and the operators are vanishing. In the last few sentences on his blog post, however, Zhang said that he will do everything to give back the money to users via email personally – and compensate FCoin user losses with the profits he would make from other projects.