Zhang Jian, the former Huobi CTO who launched FCoin in May 2018, wrote a lengthy post on Monday, saying the exchange is now unable to process users’ withdrawal demands as its asset reserve has fallen short of its liability – and the gap is estimated to be about 7,000 to 13,000 bitcoin (BTC).
The post, first published in Chinese and later translated on Reddit, comes as a shocking notice to users in China as the significant amount of assets in question led to the insolvency of the controversial model that at one point made FCoin one of the largest exchanges by trading volume.
Zhang claimed in the post the exchange was neither hacked nor an exit scam but the problem is “a little too complicated to be explained in a single sentence.”
In summary, he said the issue came from internal system errors that have – for a long period of time – credited users with more transaction-based mining rewards than they should have received. As the company failed to spot this soon enough to remedy the situation, the snowball has grown even larger since the beginning of 2019.