In a shocking development, the leading China-based crypto exchange firm FCoin has gone bankrupt, according to a report. The founder of FCoin, Zhang Jian, has divulged the report in a post saying that that the insolvent exchange would not be able to shell out 7,000-13,000 BTC, i.e., approximately $67 million to $125 million that it still owes users.
FCoin exchange was launched in the year 2018 in May and emerged as the first independent community-based trading platform in China.
Zhang also claimed that the exchange is not hacked and ruled out the possibility of an exit scam.
He also revealed possible reasons behind this sudden development and asserted that the closure is due to a series of internal data mistakes and several other decisions.
Zhang said,
Earlier when the exchange launched two years back, it claimed trading volumes emerged some of the highest all across the globe instantly with a new business model known as transaction mining. However, soon after these robust claims about trading volume, a Redditor went on to claim that the volumes were not real. He also said that the exchange was a scam.
According to reports, the business model has always been fishy right from the beginning. No one witnessed any airdrop or ICO during the launch time. FCoin also allocated 51 percent of its native tokens to users in a bid to reimburse the transaction costs. Additionally, users were also encouraged to carry out transactions as often as possible. As the platform reimbursed 100 percent of the transaction fees, they decided to pay in FT token.
It is worth mentioning that 80 percent of the FCoin’s daily profit from transaction costs was then paid back to the users.
Meanwhile, Binance’s CEO Changpeng Zhao, has called FCoin a fraud right from the middle of 2018.