On May 21, 2018, the Fcoin exchange founded by Zhang Jian went live with its "trading is mining" model.
This model claims that the transaction fees generated by users will be converted 100% into the platform token FT, and users holding FT can proportionally share 80% of the exchange's revenue. This high-yield gimmick was highly attractive, and within a month, Fcoin's trading volume surpassed Huobi and Binance, becoming the number one in the world, while the price of FT soared nearly a hundred times during the bear market. However, the platform was mostly filled with opportunists and bots engaging in wash trading; they immediately sold off FT after obtaining it, laying the groundwork for a subsequent crash.
As the platform's growth hit a bottleneck, the growth rate of transaction fee income slowed, FT dividends stagnated, and a large amount of FT was sold off, causing its price to plummet quickly, leading to a complete collapse of investor confidence. Zhang Jian's team tried various remedial measures, but to no avail. On August 27, 2018, media exposed that Fcoin's office was empty, and founder Zhang Jian had gone overseas. This incident led to significant losses for many users, including extreme cases of investors committing suicide by cutting their wrists due to losses of 2 million.
In March 2019, Zhang Jian rebooted Fcoin with a "sustainable mining" mechanism and high-interest financial products. In the high-interest financial products, the annualized interest rate for USDT locked for 7 days reached 16.08%. The "sustainable mining" also derived multiple forms such as leveraged mining and financial mining, with returns needing to be locked for a year for release, attempting to retain users. At the same time, he created the illusion of community autonomy to gain trust, with some institutions even claiming to invest tens of millions to buy FT to hype it up, once again attracting many investors. However, these models were fundamentally Ponzi schemes, as the platform lacked sufficient trading volume and compliant projects to support high returns, relying solely on new funds to fill the gap.
On February 10, 2020, Fcoin closed the platform under the guise of system upgrades, subsequently delaying recovery with excuses of system vulnerabilities and core personnel being unreachable. On February 17, Zhang Jian finally spoke up, admitting that the platform had a funding gap of 7,000 - 13,000 BTC, which at that time could amount to as high as 900 million RMB. Through blockchain address tracking, the platform's cold wallet assets had been gradually transferred to multiple exchanges for cashing out. Ultimately, the platform closed the withdrawal channel, and the initiated manual withdrawal requests were essentially meaningless, with the founder completely unreachable. This scam involved over 10 billion in funds, sweeping away the assets of a large number of global investors, which remain difficult to recover to this day.
This model claims that the transaction fees generated by users will be converted 100% into the platform token FT, and users holding FT can proportionally share 80% of the exchange's revenue. This high-yield gimmick was highly attractive, and within a month, Fcoin's trading volume surpassed Huobi and Binance, becoming the number one in the world, while the price of FT soared nearly a hundred times during the bear market. However, the platform was mostly filled with opportunists and bots engaging in wash trading; they immediately sold off FT after obtaining it, laying the groundwork for a subsequent crash.
As the platform's growth hit a bottleneck, the growth rate of transaction fee income slowed, FT dividends stagnated, and a large amount of FT was sold off, causing its price to plummet quickly, leading to a complete collapse of investor confidence. Zhang Jian's team tried various remedial measures, but to no avail. On August 27, 2018, media exposed that Fcoin's office was empty, and founder Zhang Jian had gone overseas. This incident led to significant losses for many users, including extreme cases of investors committing suicide by cutting their wrists due to losses of 2 million.
In March 2019, Zhang Jian rebooted Fcoin with a "sustainable mining" mechanism and high-interest financial products. In the high-interest financial products, the annualized interest rate for USDT locked for 7 days reached 16.08%. The "sustainable mining" also derived multiple forms such as leveraged mining and financial mining, with returns needing to be locked for a year for release, attempting to retain users. At the same time, he created the illusion of community autonomy to gain trust, with some institutions even claiming to invest tens of millions to buy FT to hype it up, once again attracting many investors. However, these models were fundamentally Ponzi schemes, as the platform lacked sufficient trading volume and compliant projects to support high returns, relying solely on new funds to fill the gap.
On February 10, 2020, Fcoin closed the platform under the guise of system upgrades, subsequently delaying recovery with excuses of system vulnerabilities and core personnel being unreachable. On February 17, Zhang Jian finally spoke up, admitting that the platform had a funding gap of 7,000 - 13,000 BTC, which at that time could amount to as high as 900 million RMB. Through blockchain address tracking, the platform's cold wallet assets had been gradually transferred to multiple exchanges for cashing out. Ultimately, the platform closed the withdrawal channel, and the initiated manual withdrawal requests were essentially meaningless, with the founder completely unreachable. This scam involved over 10 billion in funds, sweeping away the assets of a large number of global investors, which remain difficult to recover to this day.
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