Poloniex trading platform revealed in a post a few days ago that lenders in the bitcoin margin lending pool suffered a loss of about $13.5 million which is approximately 1800 BTC at current prices. The accident happened during the flash crash in the Clams market on May 26 and we read more about it in the latest cryptocurrency news.
According to the blog post, the peer-to-peer margin system at Poloniex includes both lenders and borrowers which are pooled together and rewarded for lending out the funds. In order for someone to borrow the margin funds being lent, the user has to have a certain amount of collateral to provide proof that the debt will be able to be repaid.
On May 16, the margin-tradable Clams market dropped by more than 75 percent in value in less than 40 minutes on the Poloniex trading platform causing a stir of liquidations meant to reduce the losses in order to repay the lender. However, the magnitude of the crash was way too big for the automatic liquidation system of Poloniex in order for it to properly function in the liquid market. This resulted in the loss of 1800 btc which still has to be repaid to the lenders. In the blog post the exchange giant noted:
“The velocity of the crash and the lack of liquidity in the CLAM market made it impossible for all of the automatic liquidations of CLAM margin positions to process as they normally would in a liquid market.”
In total, about 16 percent was deleted of the entire margin lending pool and 0.4 percent of all Poloniex users were affected. Both lenders and borrowers are in an unfortunate situation since the collateral provided by the borrowers were in the CLAM cryptocurrency itself. CLAM is now trading at $4.96 which is 80 percent less than seconds before the crash.
The post added:
“Lenders impacted will see the reduction in their accounts when they next log in. We’re pursuing the defaulted borrowers to get them to repay the BTC they owe to lenders. As we recover funds, we will return them to affected lenders. We’re also exploring other ways to help defray margin lender losses,” the exchange said. “We will continue to communicate with impacted lenders on the status of these efforts.”
As the coming altcoin news noted, Poloniex is taking steps to protect the users by adding layers of protections to monitor further risks.
DC Forecasts is a leader in many crypto news categories, striving for the highest journalistic standards and abiding by a strict set of editorial policies. If you are interested to offer your expertise or contribute to our news website, feel free to contact us at [email protected]
Stefan has been writing articles for DCForecasts since 2016 in-house full time. As one of our main cryptocurrency writers, he focuses on covering the latest cryptocurrency news, technical charts, price analyses of coins and press releases. When he is not exploring and covering the latest topics in crypto, you can find Stefan playing basketball, tennis or cycling.
DC Forecasts - Newsletter and get recent news directly to your inbox! Daily Newsletter Bitcoin NewsAltcoin NewsLitecoin NewsEthereum NewsBlockchain NewsBitcoin ScamsRegulationExpert AnalysisPress ReleasesCardano NewsRipple NewsLibra NewsBitcoin Cash NewsTron NewsNexo NewsVechain NewsStellar NewsTezos NewsBinance Coin NewsCoinbase NewsChainLink NewsEOS NewsIOTA NewsTether NewsBitcoin SV NewsMonero NewsEthereum Classic NewsDash NewsUNUS NewsCosmos NewsMECX Token NewsNEO NewsDC Forecasts Announcements
Daily Newsletter Bitcoin NewsAltcoin NewsLitecoin NewsEthereum NewsBlockchain NewsBitcoin ScamsRegulationExpert AnalysisPress ReleasesCardano NewsRipple NewsLibra NewsBitcoin Cash NewsTron NewsNexo NewsVechain NewsStellar NewsTezos NewsBinance Coin NewsCoinbase NewsChainLink NewsEOS NewsIOTA NewsTether NewsBitcoin SV NewsMonero NewsEthereum Classic NewsDash NewsUNUS NewsCosmos NewsMECX Token NewsNEO NewsDC Forecasts Announcements
DC Forecasts provides a comprehensive source of the latest news about cryptocurrency news daily. Read more on our about us page for details.