PAData: Potential victims of FCoin may exceed 2000, with average losses per person exceeding 25 BTC

The exchange FCoin, which was once popular for its "trading mining" model, has collapsed. What is the approximate scale of the victims affected by the FCoin collapse? And what is the average amount of loss per person?

Data Partner | Chain.info

On February 17th, the once high-flying exchange FCoin, known for its "transaction mining" model, collapsed. Founder Zhang Jian released a statement titled "The Truth About FCoin," claiming that the biggest issue FCoin is currently facing is the inability to fulfill user withdrawals due to a lack of reserve funds. The estimated amount unable to be paid out ranges between 7,000-13,000 BTC (approximately $68.6 million to $127 million).

This incident has once again brought the issue of exchange fund security to the forefront. In fact, the collapse of FCoin was a result of the inherent risks investors face when trading on exchanges. On one hand, regulations are still lacking, and on the other, the ledgers of exchanges remain opaque, leaving investors to interpret limited on-chain data. Therefore, in the event of fund security issues, the protection of investors' rights largely depends on the goodwill of the exchange.

However, this time, FCoin and Zhang Jian failed to act in the best interest of every investor. Victims in the rights protection group suffered losses ranging from tens of thousands to tens of millions of yuan. Prior to this, PANews interviewed professional lawyers to provide advice to investors.

How extensive is the scale of victims affected by the FCoin collapse? What is the average amount each victim lost? PAData, a one-stop data service platform focused on blockchain transactions, Chain.info, conducted an estimated analysis of the potential scale and extent of losses for FCoin victims based on mining data from FCoin addresses.

According to Chain.info's statistics on FCoin's 21,574 deposit addresses, 2 hot wallets, and 1 cold wallet historical total balances, on July 20, 2018, FCoin's BTC balance reached its peak, with a total of 12,900 BTC.

Looking at FCoin's entire life cycle, June 2018 was a period of rapid growth, with the on-chain BTC balance skyrocketing, reaching its peak by the end of July before quickly plummeting. However, from the end of August to the beginning of December, FCoin's on-chain balance moderately rose, reaching a minor peak on December 9, with a total of 8,574 BTC. But after this brief recovery, it faltered. Since early December 2018, FCoin's on-chain BTC balance has continued to decline, reaching 0.153333 BTC on February 15 this year, with no further changes.

Looking at the net daily BTC inflow, the median net daily inflow for FCoin (current balance minus previous day's balance) is 0.000579, which means that during the 662 days from FCoin's launch in April 2018 to its declaration of "death" in February 2019, there were approximately 331 days with a net inflow of about zero, or even negative. Moreover, after December 2018, the number of days with negative net inflow accounted for 75.57% of the total days with negative net inflow, exceeding the 15-month average. One possible inference is that the crisis for FCoin started in December 2018.

Based on the statistics of the historical total deposit amounts from 21,574 deposit addresses, the average deposit amount per investor is 10 BTC. Among them, 33 investors deposited over 1,000 BTC each, with the highest deposit amount being 15,525 BTC from a single investor.

If investors who made their first deposit after the emergence of FCoin's crisis in December 2018 and remained active in the past six months (with deposit records) are designated as potential victims of the FCoin collapse, the estimated number of potential victims is approximately 2,553. As of 2020, 206 new investors have entered FCoin trading.

From the historical data, it can be observed that there were more investors entering the market from September to November 2019, totaling 1,272 people, accounting for 49.82% of the total potential victims. According to the report from the self-media "Laida Blockchain," at that time, FCoin was restarting mining, stimulating development through FT inflation, and additionally, the platform launched the contract platform FMEX. Platform coins and futures became the last straw for FCoin's "struggle on the verge of death."

According to the statistics of historical deposit data, these 2,553 potential victim investors collectively deposited 80,750 BTC, with approximately 63,720 BTC deposited in October 2019. From January to February this year, 331 BTC were still being deposited into FCoin trading.

By observing the historical deposit amounts of each investor during this period, it can be noted that the historical deposit amounts of 1,900 potential victims were less than 0.1 BTC, while 350 potential victims deposited more than 1 BTC.

Among them, there are 46 individuals who potentially lost more than 100 BTC, which, at the current exchange rate, is approximately 6.7 million RMB. The individual with the highest potential loss deposited 15,525 BTC. Excluding this extreme value, the potential average loss per victim is approximately 25 BTC, equivalent to around 1.69 million RMB at the current exchange rate. This figure is significantly higher than the average investment amount per historical FCoin investor, suggesting that there may be more large investors within the designated range of potential victims, raising the average loss.

It is important to note that this is only an estimated analysis of the FCoin collapse event under specific conditions. There may be investors who entered FCoin trading early and have not withdrawn funds to this day, or investors who withdrew all or part of their tokens within the designated period of potential impact, factors not included in the above static analysis. The purpose of the estimated analysis is to provide a reference for understanding the scope and impact of this event.

Data Explanation:

[1] After a user opens an account on an exchange, the exchange provides the user with a deposit address. Currently, the deposit addresses provided by mainstream exchanges to users are generally non-changeable, meaning one user corresponds to one deposit address, unless the exchange undergoes a large-scale replacement. For more background information on address mining, refer to the interview with Chain.info's technical leader, Li Zhen, titled "How were 4 million exchange wallets mined? | Interview with Chain.info's Technical Leader Li Zhen."

[2] The original link to the article "The Fall of the FCoin Myth, Once Hundredfold, Now What?" by Laida Blockchain is https://www.sohu.com/a/340563034_100122547

Original Article from Partner PANews

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