It is a nightmare for several bitcoin investors. About an hour ago, FCoin has released a statement, admitting to having made losses and consequently won’t be able to pay out over $70m worth of bitcoin. In the statement released through the CEO, Zhang Jian, the amount of bitcoin the exchange can’t pay is an estimated of between 7,000-13,000 bitcoins.
“The biggest problem that FCoin currently faces is not the problem that the system cannot be restored, but the problem that the capital reserve cannot be paid by users. The internal problems and technical difficulties we face are the results of financial difficulties. It is expected that the scale of non-payment is between 7000-13000 BTC.”
The CEO goes into a long story that goes to the launch of the cryptocurrency exchange in 2018. In this, he explains the highs and the lows. But, it seems just after 2 years the exchange has hit rock bottom.
Additionally, the CEO went on ahead to address the issue and promises to pay back all losses in the future. The plan to refund the investment through profits from a new project expected to start soon.
“I have decided to switch tracks and start again, hoping to get up again as soon as possible and use my personal new project profits to compensate everyone for their losses. I will disclose any important progress of the new project through public channels”
What Went Wrong With FCoin
Since cryptocurrency went mainstream, exchanges have had a responsibility to ensure that clients’ assets are protected. This calls for exchanges to be well-secured and a well-backed portfolio. The business plan with FCoin was already having issues.
The way this has played out is like a classic scam.
Furthermore, FCoin has been reported to have made about 95% profit within the first couple of operational months. The CEO claim that the actual profit was by over 100 times.
This was around the same time the CEO notes in the post, that he knew operations weren’t going as well as he expected. Or at least that is his version of the events.
In the next few days, we might see some investors take legal action and at least we will know whether this was a scam or a ‘decision error’.
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