Crypto exchange FCoin has just made an official announcement that it will be back in operation. A commission was formed after the exchange declared bankruptcy, promising to return money to users.
The remaining team of the exchange will continue to operate the FCoin and FMex websites, handing them over to an “interim committee” led by a community representative. Notice was released on February 27 above support page of FCoin.
The community will draft a compensation plan for the affected users. The announcement did not give details, but the move could come from the company's creditors or equity.
Finally, after the payment plan is completed, ownership of the exchange is expected to be handed over to the community. However, there is no specific resuming date.
Fraud allegations
The failure of FCoin is labeled by many people in the cryptocurrency community as an “exit scam”.
Zhang Jian, the founder of the exchange, explained the incident because of “financial difficulties” and “poor auditing.” As Toiyeubitcoin reported, FCoin used a special “transaction fee mining” model – in which users were reimbursed the entire transaction fee with the platform's internal token.
When the price of the token plummeted in late 2019, Jian claimed that the exchange used its own resources to push the price up. These efforts ultimately yielded no results.
Critics have pointed out a special withdrawal model on the blockchain to draw exit scam conclusions. Blockchain analysts say the exchange's wallet has made regular transfers of 100 and 150 Bitcoin (BTC) to other exchanges, such as Huobi. Dovey Wan – founding partner of Primitive Crypto, argues that even too frequent transfers are suspicious.
Will FCoin return the money to all users?
The exchange currently allows a number of users who pass certain related procedures on a separate website to withdraw funds manually. Jian seems to be considering manual requirements.
According to FCoin's own estimates, the amount of losses was up to 7,000 to 13,000 BTC – equivalent to $ 61 million to $ 115 million at the time of writing. It is hard to expect that users will continue to trade on the platform because reputation has dropped. Repaying such a large amount may not be feasible.
The case of FCoin has some similarities to the exchange Wex.nz – which was launched in September 2017 to replace the BTC-E exchange that was closed by authorities. The founder of BTC-e, Alexander Vinnik, was also arrested in the case.
Wex.nz can only refund 55% of the user's money, starting a user loan repayment program based on the “I owe you” token. About a year later, the exchange froze withdrawals and was blacklisted by Binance. The foundation's founder was also arrested by Italian authorities in 2019.
Some legal experts argue that FCoin is a fragile disguised Ponzi scheme, in addition to being opposed by Chinese purges, the founder of the exchange may also have legal problems. .
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According to CoinTelegraph
Translated by ToiYeuBitcoin