Crypto Exchange FCoin in Hot Water for Alleged Employee Discontent

China-based FCoin, a controversial cryptocurrency exchange known for its innovative “Trans-Fee Mining” incentive program, has recently triggered a quite stir in the Chinese crypto space with allegations of the platform’s permanent shutdown and key members remaining out of contact.

It started with the exchange’s February 10 announcement stating that FCoin would permanently destroy all its platform coin FT (about 720 million FT) held by the team. In response, the price of FT token rose 20.82 per cent to a high of $0.0486 from $0.040088 that night.

Hours later that night, another announcement soon followed claiming that the exchange would temporarily shut down for maintenance at 23:50 (GMT+8) on February 10, 2020, with an estimated duration of two hours (four hours in its Chinese version)”. Upon the statement, FT price fell 16.46 per cent from the high of $0.048 to $0.0401.

While the exchange failed to resume normal service on the following day. Its February 11 announcement read that “as some staff members are not yet in place, and some modules of the system need to be rebuilt, it is expected that it will take another one to two days for the website to return to normal”.

Soon after, investors on the platform grew panic as they found they could not withdraw their orders and that custom service could not be reached; There were even claims that FCoin would cease operation permanently. Though they proved groundless with FCoin founder’s reply that they are working hard to fix the system loophole, investors’ concerns and doubts remain.

What makes the exchange the focus of talking point is a source’s comment in FCoin’s official Telegram group. The source disclosed that “FCoin’s decision about destroying all the FT tokens held by the team was merely made by the exchange’s founder Zhang Jian alone. The team who are discontented with him thus deleted the website module and took the platform down”. It shows there’re over 20,000 members in FCoin’s Telegram group, while no official staff came out to respond to the claim above.

The turning point of the incident came when the exchange announced two days later that it would open withdrawal by email to meet the need of users who have an urgent need to withdraw.

Still, the security of email withdrawals remains a focus of controversy among the community. FCoin’s incident sent a warning to users that they should not put all their digital assets in the same exchange.

According to blockchain security firm Chainsguard, they have detected that the EOS in FCoin’s hot wallet and TRC20 tokens on Tron blockchain had been transferred to a new addresses this morning; meanwhile, there have been 1,000 ETH moved to a new address followed by two relatively small ETH transfers.

As of press time, FCoin made a supplementary note on email withdrawal, claiming that “In view of the security of manual withdrawal processing, we will centrally process a batch of withdrawal applications that have been approved every 2-3 days”.

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