Scams within the cryptocurrency and blockchain industry is nothing new. Usually, most people will walk away with the thought that they got scammed and not expose it.
However, this time around it is different. Redditor under the username u/ltcisking , revealed in the cryptocurrency subreddit the details of the scam made by Fcoin exchange.
What’s the scam about?
The exposure about this scam is towards a cryptocurrency exchange based in Singapore called FCOIN.
Redditor Itcisking stated in his thread, “Spend a few minutes on fcoin usdt trading pair (hereafter, FT), or any FT pair for that matter, and it is clear to see the rampant levels of botting being done. Orders of 5, 7, 10, 15, 20 fly across the screen such that over 6 billion usd in “transactions” can be completed in a 24 hour period on FT alone. I originally suspected this was being done by a dozen or so third parties who sought to acquire large amounts of FT at a static price through the trans fee mining process, and subsequently claim a large portion of the staggering daily rewards, but after a little bit of digging it became clear that the botting came from the exchange itself.”
According to this etherscan, a single holder of FT owns 99.98% of all FT, which entitles them to 99.98% of all daily holding rewards of FT. Now to acquire this amount of the supply, even at a third of current prices, would cost an individual buyer millions, and subject them to a great deal of financial risk. It seems unlikely that any one individual would choose to take on this endeavor, except for the exchange who otherwise must rely entirely on their initially distributed supply to claim any revenue and profit from this venture. Without this behavior, they could lose everything overnight should the price collapse.
Further, to ensure the ability to maintain as much FT as possible, the price of FT is constantly manipulated. At its current price, it is impossible to acquire enough FT to gain enough daily rewards to offset risk. This is intentional as otherwise too many new entrants would appear and take supply from the bots. Combine this with downward pressure on the price every so often to rattle holders, and what you get is less than 30 active holders of your coin (see etherscan).
Now I’ve reached out to a number of fcoin staff and volunteers about these issues and they make no attempts to deny my accusations. Some have even admitted to the botting issues and the potential for the exchange to be behind both the price manipulation issues and the botting. For now I will not reveal my sources, but I am prepared to supply saved conversations in a court of law.”
Is this really considered a scam?
We’re not giving legal advice, but this would depend on how you look at it and where you are based.
In the US, the manipulation of asset prices and misleading investors is considered fraud, and damaged parties are able to seek compensatory damages through class action. Since Singapore law is similarly based on the English system, they too allow for harmed parties to form a class and file suit.
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