QOS has raised all sorts of red flags regarding its recent listing on crypto exchange FCoin and its price performance. According to local media reports, QOS may have been be involved in illegal financing activities for its recent initial coin offering (ICO).
A recent report by the China Securities Journal revealed that investors chose to invest in the QOS project mainly because of its connections with Guangdong Homa Appliances, publicly-listed firm in China.
The report said that Zhao Guodong, the chairman of Guangdong Homa Appliances, and other employees of the company had participated in the QOS project. The company, however, clarified that these investments were made on personal grounds.
The report cited sources who said that the project was developed by a team from the digital unit of Guangdong Homa Appliances.
FCoin compensation for participants of QOS fundraising
What’s even more interesting is the fact that since the crypto was listed on FCoin, the digital asset slumped over 80 percent as of August 16, according to the report.
For now, FCoin has temporarily suspended QOS trading on its platform and has requested the project behind the token to clarify and respond to recent media reports.
The exchange also announced a compensation plan for users who participated in the QOS fundraising. The compensation funds will come from the reserve of FCoin Tokens [FT] that the exchange has held since its recent repurchase.
However, the exchange has not yet revealed the exact details of the compensation and when it can be expected since it is still working on data statistics.
“The compensation is limited to the part of the platform that provides technical support for the fundraising, and the platform does not assume any joint responsibility for the QOS project,” FCoin clearly stated.
FCoin opened the QOS/ETH trading pair on the FCoin Mainboard C earlier this month. The trading pairs on the Mainboard C have a 24 hour price limit. In each day, the rise or fall of any coin’s price cannot exceed 10 percent.
This limit was put in place to protect investors from manipulation in market prices and was effective from the day the coin was listed. Within two days, the crypto’s price fell more than 10 percent of the price limit, which left many investors confused.
However, the QOS project team attributed the sharp decline to short-selling and said it was actively responding to the sudden short-selling.
QOS’ murky connections with Guangdong Homa Appliances
Another important detail to note is that according to the QOS white paper, its foundation is chaired by Zhang Zhe, who previously worked with Guangdong Homa Appliances as deputy general manager.
All the core members of the project all previously worked at Guangdong Homa Appliances. Interestingly, Guodong served as a project consultant, but Guangdong Homa Appliances has denied that his involvement had anything to do with the company.
“After verification by the company, none of its subsidiaries have signed any cooperation agreements or intentional cooperation with QOS projects, and there is no business relationship,” the report quoted the company’s statement (the quote was translated from Chinese).
But this may not be the case, since the QOS white paper mentioned several companies involved in the project. And they all have links with the publicly-listed firm.
All in all, the project definitely has some answering to do, and many investors have concluded that this was probably a disguised ICO and the fundraising may have had other uses. Whether it really is mired in illegal activities remains to be seen.
Image via Shutterstock
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