A Look Back at the Closure of FCoin and FMex
On January 4, 2020, the cryptocurrency trading platform FCoin and its derivatives platform FMex suspended spot and futures trading.Subsequently, in February 2020, FCoin founder Zhang Jian announced in a blog post titled “The Truth About FCoin” that the platform had suffered from insufficient funds due to technical errors and poor decision-making, rendering it unable to pay users, and that it was officially shutting down.This marked the end of a platform that had rapidly risen to prominence through its “Trading-as-Mining” model and had once dominated the market.
The Rise and Fall of the “Trading-as-Mining” Model
FCoin was founded in May 2018 by Zhang Jian, former CTO of Huobi, and its core innovation lay in the “Trading-as-Mining” model. This model distributed the platform’s native token, FT, to users by returning a portion of their trading fees, quickly attracting a large user base and significant trading volume.In June 2018, FCoin’s daily trading volume briefly exceeded $5.6 billion, even surpassing the combined volume of the top ten exchanges listed on CoinMarketCap at the time, and the price of the FT token reached $1.25.
However, the sustainability of this model was called into question. In his statement announcing the shutdown, Zhang Jian acknowledged that it was precisely this model, coupled with subsequent technical issues and improper internal accounting practices, that led to the platform’s financial difficulties.The platform’s biggest problem was its inability to pay out user funds from its reserves; the estimated amount of user funds that could not be repaid ranged from 7,000 to 13,000 BTC, representing losses of approximately $67 million to $125 million based on prices at the time.
Founder’s Response and Handling of User Assets
Faced with the platform’s closure and massive user losses, Zhang Jian denied allegations of a “exit scam,” insisting that internal management and technical issues caused the collapse. He stated that he would continue to process user withdrawal requests via email and planned to launch a new project, promising to compensate users for their losses using profits from the new project and his personal funds.However, this approach has sparked widespread skepticism within the community, with many users expressing concerns about the security and efficiency of the email-based withdrawal process.
Meanwhile, investigators have pointed out that large sums of funds were previously transferred from FCoin’s cold wallets to other exchanges, and that the platform burned a significant number of FT tokens—actions that have further fueled user speculation about an “exit scam.”
The Fate of FMex
As for the FMex platform, its fate is closely tied to that of FCoin. Although there were initial rumors that it would transition into a decentralized exchange (DEX), with the complete shutdown of FCoin, FMex was not spared and ultimately ceased operations. Currently, neither platform has an active trading market.
Risk Warning
The FCoin case is a prime example of the risks associated with “innovative” business models in the early days of the cryptocurrency market. Its “trading-as-mining” model led to explosive growth in the short term, but ultimately resulted in the platform’s collapse and massive losses of user assets due to flaws in its underlying economic model and mismanagement.Such incidents serve as a reminder to investors that when participating in any innovative cryptocurrency project or platform, it is essential to fully understand its operational mechanisms and potential risks, and to carefully assess its sustainability. Users can follow information platforms such as Svmuu to stay informed about industry developments and risk alerts.
