Since setting up FCoin in May 2018, founder Zhang Jian has managed to raise a staggering 28 billion RMB. This not only topped various rankings, but the value also exceeded the next seven places combined. It sounds like a fairytale launch; another rags-to-riches overnight success story, but cracks have been appearing in FCoin’s operation, and now the killer dagger blows are being struck – the company has been openly accused of conducting an illegal ICO, and more widely as a fraudulent illegal financing opportunity.
It’s not the first time doubts have been cast over FCoin. In August, Binance co-founder, Zhao Changpeng questioned the platform’s model of transaction-fee mining (trans-fee mining), which issued their cryptocurrency, FT, in exchange for any transaction fee made in BTC or ETH on their platform. Zhao remarked, “Isn’t it just buying platform token with BTC and ETH? How is this different from an ICO?” He went even further calling FCoin a manipulator, warning people about going up against those who have all the control where you have none yourself.
Investors into FCoin mainly from China
But the story of FCoin’s woes gets even more sinister with recent discoveries and developments made available to China Securities Journal. As journalists from the publication looked more deeply into the customers/investors of FCoin, it became abundantly clear that the majority of buyers were mainland ID holders, something that restrictions prohibits because of differing KYC regulations between China and other countries. A lawyer from one of Beijing’s largest firms explained that such platforms are not even supposed to provide a Chinese language page, to help ensure that mainland Chinese buyers are not encouraged to try and participate. Zhang Jian has denied that his platform is relying on such methods, and has repeatedly denied other accusations including the presence of bots or other dubious practices.
What’s clear is that an extensive lack of checking and verification on the platform has contaminated it, now to the point where the cracks have become gaping, yawning wounds. An unclean platform has created an environment of suspicious, as well as volatile market conditions that are creating chaos. The platform has even been likened to a “blockage in the Ethereum pipe” that won’t be going away very easily.
The case of FCoin should remind us all to be vigilant and thorough in our consideration of cryptocurrency platforms. Bad actors on the stage only tarnish the name and damage the future potential of this great sector of technology in the future.