The growth in the crypto space over the past half a decade or so has been primarily fueled by the emergence of crypto exchanges like FCoin, among others. While that may be true, it should also be kept in mind that many such exchanges have floundered due to a variety of reasons, and such a thing has happened with the above-mentioned exchange.
In a new development, it emerged that the exchange has paused withdrawal and trading due to a significant shortfall in crypto assets. It is a problem that could potentially have an effect on the entire crypto space.
FCoin had adopted the ‘trans-fee mining’ model for the exchange, which, over the years, has been regarded as a controversial system. At this point in time, FCoin has a shortfall of as much as $130 million worth of crypto assets. The founder of the company, Zhang Jian, shared a long blog post in which he stated that the exchange is unable to process withdrawals.
The asset reserves on the exchange have apparently fallen short of its total liabilities. In the same blog post, Jian pointed out that the total shortfall is between 7,000 and 13,000 Bitcoin.
The news has come as a massive shock to all crypto enthusiasts in China due to FCoin being one of the biggest exchanges in the country by trading volume. In addition to that, Jian pointed out that the exchange was neither hacked nor had it been scammed in any way.
He went on to state that it was difficult to explain the situation in a blog post. It is believed that due to the system in place at the exchange, FCoin users had possibly been awarded higher transaction-related mining rewards than they were entitled to.
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