Chinese Crypto Exchange FCoin to Relaunch After Insolvency
Governance to be passed onto the community, according to announcement
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Chinese cryptocurrency exchange FCoin and its futures trading platform will be relaunching after announcing insolvency earlier this month. An interim committee consisting of community representatives will be in charge of the matter, converting users’ assets into either creditor’s rights or equity.
Insolvent Exchange FCoin Announces Relaunch
Following the news about its insolvency, Chinese cryptocurrency exchange FCoin announced that it would be relaunching both its spot and futures exchanges.
An interim committee consisting of various community representatives and current members of its Social Council has been set up, the company said in the announcement. The so-called “Reactivation Working Group” will focus on restarting operations on the FCoin spot exchange and the FMex crypto derivatives exchange.
The existing team is currently looking for an optimal technical solution that will be able to get both exchanges up and running as soon as possible, FCoin explained. Once the websites are up, all governance will be handed over to the newly formed transitional committee.
FCoin’s second step will be to draw up a “conversion plan” that will enable them to convert users’ assets into either creditor rights or company equity. The entire process will be open both to the public and the FCoin community.
The final step of the relaunch will see FCoin turn over the operation of both exchanges to the community. However, the company announcement has not revealed further details about this process.
FCoin Picking up the Pieces
The company’s relaunch efforts come less than two weeks after it announced insolvency following internal struggles.
Zhan Jian, the founder of FCoin and former CTO of Huobi, explained that the company suffered from “financial difficulties” and was unable to process user withdrawals, which amounted to between 7,000 and 13,000 BTC.
FCoin’s “transaction-fee mining” model was responsible for its insolvency, Zhang explained in his Reddit post. This mechanism would reimburse users for every trade fee in the exchange’s native token, FToken (FT).
And while this model made FCoin the most popular exchange in 2018, the model, combined with data and decision mistakes, cost the exchange its reserves. FCoin had been periodically paying out users slightly more than they could afford due to a lack of adequate analytical tools.
Zhang also noted that all remaining withdrawal requests would be paid out through a two-part plan, with most of the withdrawals covered from profits of his “new projects.”
The company’s decision has been met with much criticism, as its transaction-fee mining model has been raking controversy since 2018.