Troubled crypto exchange Fcoin will continue trading after promising it would pay compensation, despite filing for bankruptcy protection.
The controversial crypto exchange ran into financial difficulties after a rogue employee destroyed a value of the exchange’s native tokens, worth $750 million. The move almost forced exchange founder Zhang Jian to declare bankruptcy, as well as forcing the exchange to take the drastic step of filing for bankruptcy protection.
A notice published to the exchange’s support page said Fcoin would resume operations as soon as possible under the existing team, before being passed to an “interim committee” led by representatives of the community.
Those owed money in the bankruptcy are set to benefit from a plan for compensation. While there are scant details available at the moment, the plan will attempt to balance claims from shareholders and creditors in apportioning compensation for those affected.
Once the payment plan has been satisfied, the exchange is to be handed over to the community, though a timeline has yet to be established for the handover.
Fcoin previously relied on so-called “trans-free mining”, where users received compensation in native tokens. However, the firm’s founder has admitted to “financial difficulties” and “poor auditing”, even beyond the token destruction that cost Fcoin users millions.
There have also been suspicions raised in the wider crypto community about a potential exit scam at Fcoin, where shareholders seek to maximize value before collapsing the scheme into bankruptcy to their own benefit.
According to estimates from Fcoin, the insolvency totals somewhere between 7,000 and 13,000 BTC, equivalent to $61 million to $115 million. Some analysts have suggested this is unlikely to be enough to meet the claims of creditors, meaning some will remain out of pocket as a result of the collapse.
The founder of the exchange pledged to do everything possible to meet the claims of creditors, including from his own personal resources. It remains to be seen whether this can go some way to compensating those still losing out in the affair.
The insolvency is only the latest example of an exchange collapsing in suspicious circumstances, with users often losing out from bankruptcy and insolvency processes.
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.
