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Investors Who Lost Big in Poloniex Flash Crash Receive Bitcoin Refunds
Poloniex allowed margin trading on the coin until a flash crash wiped out 1,800 bitcoins worth $13.5 million at the time
Updated Sep 13, 2021, 11:19 a.m. Published Aug 13, 2019, 4:00 a.m.
Poloniex is now crediting trading fees in bitcoin to lenders who lost funds in a May market crash involving the obscure cryptocurrency clams (CLAM).
According to an official blog posting, Circle’s Poloniex exchange will cover lost bitcoin funds by covering trading fees in bitcoin. Fees will be covered back from June 6 until an account is fully repaid. Poloniex’s clam margin trading market experience a flash-crash on May 26. A 2014 airdropped token credited to holders of bitcoin, litecoin and dogecoin, Poloniex allowed margin trading on the coin till a flash crash wiped out 1,800 bitcoins worth $13.5 million at the time.
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The drop crashed clam’s price 77 percent in just 45 minutes.
Poloniex
socialized the lost coins to the exchanges bitcoin margin lending pool. A total of 0.4 percent of Poloniex users lost 16.2 percent of their funds held in the pool to cover the defaulted loans.
At the time, Poloniex blamed the flash crash on the velocity of sell orders along with a general lack of liquidity within clam margin trading. Poloniex said it was pursuing borrowers who defaulted but the conclusion of the effort has yet to be disclosed.
On June 14, Poloniex distributed 180 bitcoins to 10% of those affected by the flash crash. The distribution was an initial method to repay the bitcoin lending pool. Under a new policy, lost bitcoin funds will be returned by repaying exchange fees in bitcoin.
In response to the crash, Poloniex closed margin trading on BTS, CLAM, FCT, and MAID.
Imagine via Shutterstock
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