FCoin Crypto Exchange Draws Fire for New 'Trans-Fee Mining' Model

China-based FCoin - a new crypto exchange launched in May that takes a novel revenue model - has come under the spotlight after its trading volumes appear to have almost immediately surpassed some of the largest exchanges.

While the platform's trading data is currently not visible on more notable third party sites such as CoinMarketCap, a similar service in China indicates that FCoin saw over $5.6 billion in trading volume over the last 24 hours - more than the sum of the top-10 platforms on CoinMarketCap.

Founded by Zhang Jian, the former chief technology officer of Huobi, FCoin touts a new business model that effectively turns cryptocurrency trading into mining, since it provides a means to obtain FT tokens issued by FCoin.

According to the platform's white paper, the total amount of FT is capped at 10 billion, 51 percent of which will be allocated to the public and 49 percent will be held by FCoin and its investors.

Instead of adopting an initial coin offering or an airdrop, FCoin is issuing 51 percent of tokens to the public in exchange for making transactions on the exchange.

For every transaction fee a user pays to FCoin in the form of either bitcoin or ethereum, the platform will reimburse the user 100 percent of the value in FTs. In addition, FCoin says, for all the bitcoin and ethereum it collects in transaction fees daily, it will distribute 80 percent in bitcoin to users who hold their FTs continuously throughout the day.

Within a month of FCoin's debut, various media outlets in the Chinese crypto community had raised questions over whether traders are just using bots to send fake transactions to receive the FT coins.

Notably, OKEx, the Hong Kong-based crypto-to-crypto trading platform launched by OKCoin, announced on Wednesday that it too is launching a program that will help 100 new crypto exchanges to adopt the trans-fee mining model.

By holding 500,000 OKB, the token issued by the OKEx exchange, partners of OKEx would receive technical support from the platform in launch an exchange utilizing the new concept, the firm said.

On Thursday, in a move possibly aimed to ridicule OKEx and FCoin, Binance made a seemingly sarcastic announcement that it is going to partner with 1,000 teams to open 1,000 new trading platforms adopting the same trans-fee mining model.