Cryptocurrency exchange FCoin has become a well-known exchange in the industry for the first time due to its pioneering “trading mining” and dividends with investors. However, recently, it faced the crisis of bankruptcy. The founder Zhang Jian announced on the official website of the Exchange yesterday that the biggest problem is that the fund reserves are insufficient to handle user withdrawals. It is expected that the amount involved will range from 7,000 to 13,000 bitcoins. The contract is between $68 million and $126 million US dollars.
FCoin has temporarily stopped trading since February 10, and has not resumed operations to date. At the same time, users have not been able to withdraw funds from the exchange. There have been rumors that there are operating teams who have been fled or fled. The cost of hacking is heavy. Until yesterday, Zhang Jian issued an announcement entitled FCoin Truth, explaining the situation facing the exchange. He pointed out that currently, it is not because of hacking or team embezzlement of public funds that the exchange has encountered financial difficulties and caused internal and technical problems, but data errors and decision errors.
Zhang Jian said that when the operation started in mid-2018, due to the popularity of the transaction mining model, that is, users continue to trade, can get rebates, thereby stimulating the overall transaction volume. However, due to the error caused by processing a large amount of data, it was given back to some users, but the operation team did not spare any effort to deal with it. As a result, it is estimated that this problem caused the exchange to lose $10 million to $20 million US dollars.
At the same time, after the price of FCoin’s token FToken increased 100-fold after listing, it continued to retreat at a high level. After falling 95%, Zhang Jian said that his team and his team will use the profits to buy back FToken. However, this move has become a repurchase. The dividends previously issued due to data errors allowed some users to profit from it. “All the accumulated wealth of the team and me have become stepping stones to help others cash out,” which ultimately led to the loss of assets for the exchange. Zhang Jian said that because he found it too late, he could not remedy it in time. He claimed that he had sought help from the founder of Huobi, because the two had been colleagues for many years. Although Zhang Jian did not disclose the specific response of the other party, it is estimated that the request for help failed.
According to him, mistakes in decision making are all personal responsibility, and users are urged not to blame investors and other team members of the exchange. During this period, payment will be made to the user as much as possible by postal withdrawal, and Zhang Jian will handle it in person. It is expected that it will take 2 to 3 months. However, the exchange has insufficient assets and can only hope to reduce the number of affected people as much as possible. After that, he will “switch the track and start again” and use the profits of the new project to compensate FCoin users for losses.