On February 17, 2020, FCoin founder Zhang Jian released the "FCoin Truth" announcement. FCoin was unable to cash out users' withdrawals due to insufficient capital reserves, with a scale of up to 7000-13,000 BTC.
As soon as the announcement came out, the industry shook, and tens of thousands of investors may face a state of nothing. Fcoin thunderstorm, how can users get their money back? Should the police file a case and wait for the ruling of the law, or should they turn from passive to active, and the community should start self-control?
On February 27, Babbitt's "Ask 8 Events" Phase 1 video link FT community partner chanwe, RenrenBit founder, Bitfinex shareholder Zhao Dong, and Tai Hetai (Beijing) Lawyer Lawyer Luo Tao, on the "FT community Relaunch the latest progress and how investors can effectively safeguard their rights "to conduct professional discussions, track the latest progress on FCoin, and clarify a way for FCoin users to defend their rights.
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Zhao Dong: FCoin restart conditions are not met, Zhang Jian wants to make clear the balance sheet
Question: What do you think of the content of the "FCoin Truth" announcement issued by FCoin founder Zhang Jian? Is Zhang Jian running away?
In my opinion, the first is insolvency. Whether he runs away depends on whether he reappears. He lacks some transparency during this time.
How did the insolvency situation arise? According to Zhang Jian, it is a technical reason. I think that simply categorizing it as a technical reason is not enough to explain all the problems. Technical reasons have lost dozens of coins and several hundred coins. Bitcoin. With reference to the situation of exchanges in history, I personally think that the probability of misappropriating user funds to speculate in coins is relatively high. Question: Can FCoin learn from the case of Bitfinex's thunderstorm that year to solve debt repayment?
In August 2016, after Bitcoin was halved, Bitfinex was stolen and 120,000 Bitcoins were lost.
At that time, the price of bitcoin was $ 604. These 120,000 bitcoins were equivalent to $ 72 million, which accounted for about 35% of the total assets of the exchange at that time, which means that the total assets of the exchange were about $ 200 million.
After the incident, Bitfinex announced all the financial reports from the establishment of the exchange until the loss of coins, and investors can clearly know the balance sheet. According to the balance sheet, all the money made by Bitfinex before 2016 is $ 30 million to $ 40 million. Even if all the previous profits were taken back, it was not enough to cover such a large loss.
I united more than 7,000 customers who traded in Bitfinex at the time, and my representative went to talk to them. The first sentence of Bitfinex was: I have an open mind on all solutions.
It can be seen that its first demand is absolutely not to be the second Mt.Gox. The Mt.Gox incident occurred in early 2014 because of insolvency and a bankruptcy process was adopted.
It is very troublesome to go through the traditional bankruptcy liquidation process. I don't recommend it.
A plan was also discussed at the time, seeking third-party acquisitions. This process went particularly slowly. Bitfinex believed that users could not wait, and launched a convertible bond program in October 2016, turning 70 million US dollars into a tradable bond, and then quickly allowed everyone to convert the debt into shares. .
At that time, I bought a part of the Tokens of the tradable bonds at a relatively low price. After the conversion was allowed, I converted all the Tokens into shares. This is how I became a shareholder of Bitfinex.
After the theft of Bitfinex, many users did not believe it and took away their assets, but another user chose to continue to believe, so Bitfinex still has income.
Bitfinex continued to repurchase bonds with profits until the first quarter of 2017. By the second quarter of 2017, Bitfinex began to pay dividends to shareholders. Due to the bull market in 2017, Bitfinex's shareholder dividends are increasing, from 1 cent per share to $ 1 per share later. For most of the creditors at that time, from the initial loss to the final processing result, they should be happy.
I think that Bitfinex's plan can be used for FCoin's reference, but it is not immediately feasible. Because for Zhang Jian, first of all, have to re-think the way, how to regain everyone's trust, how exactly did 10,000 bitcoin losses cause? You have to give credible processes to convince everyone.
This is not the same as Bitfinex's situation. Bitfinex was a hacking incident at that time. Where the currency was transferred from and to what address were publicly available, so it could quickly win back the trust of investors. For Zhang Jian's lost 10,000 bitcoins, everyone does not know the whole process. You simply say a technical problem in one sentence, and there is no way to explain it. In addition, it is necessary to explain clearly what the balance sheet of the entire exchange is. This must be clearly explained before the restart process can be taken . I don't recommend going through the restart process now. It's a very irresponsible way to give the project to the community. Q: What aspects of FCoin restart plan need special attention?
I don't think there are the basic conditions for restart now. I don't know the balance sheet, and I don't know how to lose money. It's hard to get everyone's trust. Zhang Jian is the first person responsible. At this time, I really want to solve the problem, and I must honestly tell everyone the financial status of the individual and the entire financial status of the project.
In addition, whoever is responsible for these community committees and who is taking the lead should stand up in real names . Otherwise, this is still a black box operation, which fools everyone. Q: After the restart, if the user's assets are converted into stocks, will they face the risk of stocks falling to zero?
Not necessarily, such as Bitfinex's 200 million assets at the time, it lost 35%. After everyone knew Bitfinex's mentality, many people had the bottom of their hearts.
At present, the biggest problem of FCoin is how many assets and liabilities there are. It is not clear to everyone. Restarting in such an anxiety, I think it's just a waste of money, which is very irresponsible. Q: What should I do now for FCoin investors?
My suggestion, on the one hand, is to report the case, on the other hand, to put pressure on Zhang Jian to figure out the balance sheet and Zhang Jian's own assets.
Q: If an investor does not agree to the conversion, is there any other solution?
I think it should be converted into debt first . At this time, the most reliable approach is to convert these irredeemable currency into legal currency value debt in a way recognized by law, and he himself bears unlimited joint and several liabilities to pay it permanently.
After Bitfinex lost money, I signed an agreement with my investors in a similar way, so this was relatively feasible. Of course, as a creditor, there is no better way than this. To turn it into a debt, Zhang Jian himself must sign it and repay it with unlimited joint and several liability instead of restarting and handing it over to the community. This is nonsense. Q: Is this debt to be repaid?
Zhang Jian personally. If you report the case, it must not be Zhang Jian's company because the company does not hold these bits. The entire operator is actually Zhang Jian. If it involves illegal crimes, it is actually Zhang Jian and his core team. .
Zhang Jian is the first person in charge. His series of major decisions have caused all kinds of problems today, so he must bear this responsibility . Q: Can exchanges be trusted now?
First of all, regardless of whether it is a small or large exchange, most of the platforms are not transparent. Even the larger exchanges have a lot of assets, which does not mean that they must be solvent.
In 2014, Mt.Gox was once the world's largest Bitcoin exchange, with more than one million bitcoin assets, and eventually went bankrupt because its assets did not have much debt.
Because it is opaque and unregulated, it constantly misappropriates customers' assets for transactions. In fact, the root cause of the bankruptcy of Mt.Gox was not theft of coins. At the time, due to the scalability of Bitcoin transactions, it caused different exchanges. Losses, but the losses of these exchanges are generally only a few hundred bitcoins, and Mt.Gox's deficit is more than one million bitcoins. Only by misappropriating assets can it cause such a large loss. Hackers may be the last to overwhelm camels. Root straw. In other words, Mt.Gox instantly hacked. Q: What advice do you most want to give?
Suppose that FCoin really needs to be restarted. The points I just suggested must be completed first. If Zhang Jian is unwilling to cooperate, these means must be adopted in criminal proceedings.
If Zhang Jian really wants to solve the problem, I think he should step forward and do it with an open and transparent mindset. If he is really determined, I think these can be solved. First of all, you have to prove what you can do well. From today on, you must change the evil and be correct. It should be transparent and transparent.
If he had been transparent on the first day of the establishment of the exchange and tied his hands and feet together, he would definitely not be today.
I don't think it's a matter of character, but when you make some wrong choices, it's involuntary to walk back step by step many times.
For example, in the case of misappropriating user assets, as long as you move a dollar, there is no difference between it and 10 dollars. You misappropriate this money, if you make money, will you stop it? If you lose, will you close it?
Therefore, the misappropriation of user assets, once the bow is opened, there is no turning back , this must be eliminated from the beginning.
My suggestion is that because there is no supervision, it must be transparent and credible in a mathematically verifiable form.
FT Community Partner: Actively communicate with Zhang Jian to support Zhang Jian's resurgence
Q: How do you feel after seeing the "FCoin Truth" announcement issued by Zhang Jian? FCoin has a thunderstorm.
When I saw the announcement on February 17, it was actually very sudden and very surprised . After reading it, I had no idea what he meant to express.
Q: Does the FCoin community have some judgment on this?
Someone has looked at the previous historical data. Some of the data was not found around June 2018. We think that the data error may be there, but it includes the following decision errors, Zhang Jian and the team ’s problems. There are no signs at all, and the losses to the community caused by this part are definitely unbearable for the community.
Q: What does it mean if the data is not wrong, or if it has not been artificially destroyed?
This definitely means that the management team of the FCoin team has a very big problem. It was not introduced to the community until the end. This is also a relatively large problem. Many previous decisions were not transparent .
Q: How much is the loss of the FCoin community?
The median mainstream currency should be around 10,000 Bitcoins.
Q: The community supports the restart and rights protection plan. Which one do you prefer?
I have not done statistics, but I must be a reorganization case. Because I was actively communicating and reorganizing things from the beginning, I did n’t pay much attention to the situation of activists outside.
Question: Is the community project really communicating with Zhang Jian himself?
Restart is indeed communicating with Zhang Jian himself.
Question: Has the current membership of the restarted ICPC been determined?
The membership of the IC is definite.
Q: Why is there no public list of the ICPC?
I think this is a personal wish. At present, the member organizations are mainly large lossrs on the FCoin platform. I believe that they should disclose their identities at the right time, but it is true that they have not missed any words at all. What's wrong with them, what if they collapse?
Q: The final decision is to restart, is Zhang Jian to decide or the FT community?
It should be the wishes of both parties, and restarting should be a decision to minimize everyone's losses. No matter whether he chose to issue bonds or convert debt into equity, it is a more favorable choice for everyone.
Question: Except for FCoin and FMex participating in this restart, why did other F series not participate?
It should be considered the difficulty of reorganization, first easy. FMex was opened late, and the above transactions were less contrasted, and it was also the main source of FCoin profits before.
Q: Where is the operating right of the FCoin community now?
Before the handover, it is still in the hands of Zhang Jian and the technical team, and it will be given to the IC after the handover.
Q: Will the entire exchange be transferred to community operations in the future? There are some techniques including code.
This is considered.
Q: How many people are still working on the FCoin team?
The wallet is definitely Zhang Jian in the tube. I don't know exactly how many people are still working.
Q: Can FCoin now open the website and let users check the balance?
We will pass on the user's needs to Zhang Jian. If FCoin does not know how much deficit or debt it has, you will not be able to determine the proportion of debt or equity conversion.
Question: What are the steps after restarting work?
The first is to figure out the specific liabilities, and the amount of funds lost by each person. How to convert these funds into debts, and in what ways to repay these debts, where does the profit come from? These are all to be done later.
Q: Is it mandatory to transfer assets to debts or shares after the restart?
This is one of the options. My suggestion is to convert part of the debt to part of the stock. You can choose, it is not mandatory. There are still some people who choose to withdraw cash. These are also under consideration, and it is not yet possible to finalize which option.
Q: FCoin thunderstorm, what lessons has the community learned?
I think it's more about the operational aspects of centralized exchanges. At present, a large number of exchange assets are not transparent, and the operation decision mechanism is also not transparent. Many exchanges lack financial reports or even simple income and expenditure information . In the future, when choosing an exchange, users should focus on these things.
Q: If Zhang creates his own new project in the future, will the community support it?
I personally support it. Supporting his new project is supporting debt repayment.
Q: Are there any good suggestions for the FCoin community?
No matter which way you choose, or if you look at things sensibly, whether you are on the road to defending rights or restarting, I just hope that everyone can be rational . If you really believe in the police, you should collect everything and give it to the police. Individuals should not do too much aggressive behavior.
Question: If FCoin is still not in debt after the restart, users continue to defend their rights and complain to the ICPC. Are you ready?
I think it is prepared.
Lawyer's point of view: defending rights must be prepared for a protracted war
Q: From a legal perspective, is there a specific definition of the current FCoin thunderstorm?
Legally speaking, there are several possibilities to analyze from the announcement information currently disclosed by FCoin.
One is fraud, the other is illegal fundraising, and the other is illegal business.
Especially for the illegal operation, this is a crime . At present, laws are lagging behind, and entrepreneurs have many behaviors that may be included in this range.
In our country's practice, especially in Beijing, Guangzhou, Shenzhen, and the law enforcement environment of more developed cities, including Chengdu, this crime is rarely found.
Because if you use this charge, it is not only for entrepreneurs in the currency circle or the chain circle. Even for other industries, many bosses can now do almost nothing. Question: The feasibility of FCoin being charged with illegal fundraising and fraud?
According to the latest announcement of FCoin, filing a case is relatively difficult .
Because it is necessary to prove a subjective intention , either Zhang Jian or FCoin, as a subject, there must be a subjective intention to prove that the funds have been misappropriated. The establishment of this platform is to do this thing, or the original intention is not to encroach on users. Assets, but it ’s hard to prove that the idea changed after the platform was set up.
From the perspective of investors, it is too difficult to prove these two crimes, and the crime of illegal business was also mentioned just now. Public security has a strict grasp of the scale, and will not easily establish a criminal case. Question: After the "FCoin Truth" was announced, some lawyers commented that Zhang Jian acknowledged his claim and successfully converted a criminal case into a civil case. Do you agree with this statement?
This is a bit subjective.
The crime of fraud requires a subjective and deliberate judgment, with corresponding evidence to prove it. For example, in the process of setting up a trading platform, all his actions are for a certain purpose.
Whether criminal liability can be avoided does not depend on what one person says, but on how one person does it.
He now acknowledges that he has debts in the announcement, but if he does not pay back and transfers various assets behind it, these can be implemented, no matter how the announcement is written, he cannot easily turn a criminal case into a civil case. If so, the cost of crime would be too low. Q: Is it legal for the community to restart the conversion of assets of investors and users into debt or equity?
It is actually a debt restructuring. Whether it is legal or not is too complicated to say, because these exchanges run by some people in China actually cover a lot of subjects, and it is difficult to determine where the jurisdiction is.
Assuming this matter is under the jurisdiction of the domestic public prosecution department, it is equivalent to let Zhang Jian and the actual controller behind it admit that the company is actually operating in China . This is a blatant violation of the "9.4" rule. This is not just a fraud or illegal business, but there are financial crimes waiting for them. Question: If the user's assets are forced to be converted into debts or shares, they will be handed over to the ICPC. If the user does not agree, can I sue the ICPC?
This depends on what the community regulations look like.
We can refer to the reorganization of creditor's rights . The provisional committee is equivalent to the creditor's rights processing committee and must be authorized by all users.
If the platform transfers all assets to the IC, then there will be inheritance of rights and obligations. If the user does not want to dispose of his property by the ICPC, he can bring it together to sue the ICPC.
But as far as the announcements I have seen, the ICPC is not a subject, it is actually an autonomous organization similar to a community. You do n’t know who is in it, and if you want to sue, it will become a class action. Our country has no corresponding precedent in this regard. Q: How should investors effectively protect their rights? Are there any things to note?
It involves two levels, one is at the legal level, and there are specific issues in legal regulations and legal practice.
The second is all creditors. If creditors want to make the biggest claim against FCoin, they must first realize that this is a long-term thing. Secondly , referring to the P2P method, all creditors must be concentrated in one, and one person cannot fight against one organization. Thirdly , in the process of reporting a specific case, there must be a unified internal opinion, which crime to rely on, and how to communicate with the police. Q: A small number of users have received Zhang Jian's compensation. Will this affect Zhang Jian's penalty after being filed?
A big point for prosecutors in considering economic crimes is whether they will compensate the victim and how much, including whether he has done his best to compensate him, including comparing his personal financial or corporate financial resources. This is a relatively subjective judgment. The objective criterion is how much to pay and the ratio. This is fixed.
From another perspective, if Zhang Jian or FCoin lost money before the case was filed, and no assets can be paid after the case is filed, would investors still have the incentive to promote the current debt restructuring? So this is a contradictory place.
FCoin's reasonable approach is to pay a part first, but it must be spared to ensure that after the case is filed, there is sufficient funds to bear the space for the next negotiation, and also to leave enough funds to start again. Question: Is there any contradiction between the restart and the report of rights protection?
The final treatment is contradictory. If you file the case in a civil way, the investor and the platform can continue to coordinate and reach a certain agreement, such as debt restructuring, before the assets are sealed up and frozen. However, once it enters criminal proceedings, it will be difficult for defenders to have further room for negotiation on FCoin. This will, to a certain extent, dampen the confidence of investors who currently wish to discuss restructuring.
Q: Some activist users have taken some extreme measures to force Zhang Jian to appear. Are there any suggestions?
My advice, no matter who the investor is, no matter how much the investment amount is lost, do not do extreme things . If you do something extreme, you just make a wedding dress for others.
Some extreme behaviors may even cause Zhang Jian or other actual control of the road.
I have seen many similar cases before, but those who have adopted extreme methods have basically failed. Q: What materials need to be prepared for reporting rights?
Prepare as much information as possible . Starting from the FCoin platform, everything is added to the catalogue in chronological order, serialized, and printed on A4 paper, so that the public security can clearly see the investor's experience, and there is not much else that can be done. .
Q: If I go to a criminal case, will I not get compensation?
possible. For example, in the traditional market, if a general company goes bankrupt, the assets on the books will be distributed according to the proportion of each person in the case. In the middle, the costs of filing a case, the cost of execution, and the labor compensation of the management committee must be figured out.
Q: How long will it take for users to receive compensation through rights protection?
Taking Beijing as an example, there will be an internal review after the case is filed. After the review, whether to take coercive measures to the next step is usually 37 days.
Then report to the procuratorate to decide whether to approve the arrest. The procuratorate has one week to judge whether to arrest.
If you want to apprehend, it will take a month to return to police. One month after the public security investigation, it is one to one and a half months to the procuratorate to examine whether it is possible to bring a prosecution to the court. At this stage of the Procuratorate-Public Security Bureau, it takes at least one year, and like this new type of case, it will definitely be transferred to a higher court, which also extends the review period. Therefore, I will conservatively estimate that the public security-Procuratorate will only take one year To the court.
For major cases, it is estimated that the court must have at least one year in the first instance and analogy in the second instance. If there is evidence collection or reconsideration in the middle, especially the evidence appraisal, the extended time is even harder to estimate. Therefore, in this analysis, it is conservatively estimated that the trial is only at least two to two and a half years. Getting compensation also involves the level of enforcement of the judgment, which is even more difficult to estimate.
Write at the end
Rights protection is a long way to go. Before you get your satisfaction, rights defenders must protect themselves, orderly, efficiently, and rationally. Here, "8 Questions Big Event" also shouted to Zhang Jian himself: No matter what he did, he must have a reasonable response to all investors and users.