Not everything that glitters is gold in the crypto world. And that can be clearly seen among cryptocurrency exchanges, because despite the great variety of options that exist to exchange our crypto assets. We always run the risk of facing a situation like that generated by FCoin, the Chinese exchange that will not pay the debt to its users after its closure.
The exchanges in the world
The exchanges are one of those elements without whose presence it would be impossible for the crypto world to exist. Well, it is through these platforms that Blockchain users can acquire the cryptocurrencies of their choice.
At the same time that miners and other cryptocurrency holders can sell the cryptocurrency tokens they own. Exchanging them for traditional fiat money, or other cryptocurrencies that they prefer to own.
Generating in this way a dynamic of supply and demand, from which the price of virtual currencies is determined. And all thanks to the service offered by companies such as Binance or BitMEX. On which the foundations of the crypto world are laid.
The case of FCoin
However, sometimes cryptocurrency exchanges, rather than providing a service to the community, end up being a bad thing for it. Either by owning an insufficient security infrastructure, which leaves the money of its users unprotected against cybercrime. Or even for being nothing more than fraud organized by unscrupulous people.
This seems to be the case of FCoin, a Chinese exchange that enjoyed great visibility since its launch at the beginning of the year. Well, thanks to a method supposedly discovered by them and called “mining transactions,” they reached one of the highest daily transaction volumes in the world.
This impressive performance soon proved to be false. When a Redditor report reported that most of the purchase orders on the platform came from bots. At the same time as other irregularities with transaction fees, they led Binance founder Changpeng Zhao to call FCoin a ponzi scheme.
A situation that has reached its natural culmination a few days ago. When the simultaneous participation of several users buying and selling cryptocurrencies, and withdrawing their profits, led to the closure of the platform. With the founder of it, Zhang Jian, announcing that he will not be able to honor the debt he has with his users for a value between 7,000 and 13,000 Bitcoins, equivalent to between 67 and 125 million dollars.
Although Zhang has denied that FCoin is a scam, and has stated that it will compensate its users with the profits of other undetermined projects. The lack of a coherent response on the cause of the exchange closing (blaming innumerable small mistakes), has led the crypto community to consider the exchange a scam. Which reminds us of the need to take care on which platforms we trust our money. And making this our Data of the Day here in CriptoTendencia.
International Studies student, interested in economics and international politics. Passionate about the progress of the Fourth Industrial Revolution in general and cryptocurrencies in particular.