Binance founder and CEO Changpeng “CZ” Zhao has accused Chinese trading platform FCoin of taking advantage of its users with its “Trans-Fee Mining” model. The accusation comes as FCoin is already battling criticism for reportedly being behind a series of Sybil attacks that congested the Ethereum Network recently.
In an interview with Fred Wang of Mars Finance, Zhao said that FCoin could not be compared to Binance despite its great market performance, as the former was involved in a volume fraud.
“We need to know that we need to compare apples to apples. A falsified transaction volume can’t be compared with real ones. It’s like comparing air with gold. Two accounts can just with each other and it is easy to have 10 million or 100 million transactions a day.
A falsified transaction makes the parameter meaningless. I think we should look at user accounts and other parameters… In the end, the most important battle to fight is about product and service. My concern about this model is that it is hurting the users, and they are being taken advantage of,” he was quoted, as saying.
Zhao attributed constant media hype and a pyramid scheme like business model for FCoin’s sustenance so far, but he pointed out that it was doomed to fail sooner than later.
“A few weeks after blocks can no longer be produced, how can this business model sustain itself? Who would pay a 1%transaction fee? Is it not a total waste? Why not just hold the coins themselves to receive a dividend? However, when no one is trading through the platform, the platform would have no income to pay the dividend. When return is low, who would hold the coin? Everyone would start to sell off. What would happen to the price of this platform?,” he said.
“So I think it’s almost a miracle that the model has survived until now. Such a miraculous survival should be for the following reasons: One, some media whose interest is bound with it keep saying good words. Second, some players who got locked up in early stage have no choice but to take others in to free themselves,” he added.
Answering a question on whether Binance too was doctoring its trade volume as it had been suggested in a recent blog, Zhao said that it was a misunderstanding that arose due to his interview’s Chinese translation. He emphasized that fake volume trading was hurting the concurrency as a whole.
“When the article was translated into Chinese, there were some deviations. In fact, the article stated that there is no false trading volume only in Binance Exchange, because we did not do false trading. The article mentioned other people’s fake trading volume. It is not good for our industry. Makes our industry look very fake. But I think users are all smart,” he clarified.
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