Poloniex users are threatening to sue the exchange platform after the lenders lost about $13.5 million in a CLAM price crash. In order to recover the lost funds, the exchange slashed the principal of active BTC loans by 16 percent and we are reading more about it in the coming altcoin news today.
CLAM’s price fell from $20.30 on May 26 to $6.10 after the two-hour flash crash and the sudden price drop caused the majority of the margin loans to default on the platform. As a result, the margin lenders at the exchange lost about 1,800 BTC according to the blog post that the company posted yesterday.
The exchange was unable to process the automatic liquidations due to the velocity of the crash and according to the exchange:
“In addition, a significant amount of the total loan value was collateralized in CLAM, so both the borrowers’ positions and their collateral lost most of their value simultaneously. As a result, some borrowers were unable to repay their loans with the digital assets they held on Poloniex.”
To cover the losses Poloniex managed to perform a 16.2% cut from all active BTC loans on the platform and even froze the defaulted borrower accounts until they manage to repay the loans to the lenders. The losses made an impact of about 0.4 percent of the users. Reddit users reacted:
“It’s just theft. Haircut… you mean theft?”
Poloniex users blamed the platform for the issue saying that the company was responsible for the lender losses and not the users. They have also been talking about launching a lawsuit against the exchange. They are very pessimistic, however, of the outcome considering that Circle which is backed by Goldman Sachs owns the crypto exchange.
As reported earlier in the latest cryptocurrency news, socializing losses is illegal in the United States where the Poloniex crypto exchange is based. This means that users still have a great shot of winning in a possible lawsuit against the exchange platform. In order to avoid any kind of legal cases, Poloniex should take responsibility for the margin trading problem and possibly to refund the lender’s funds in order not to get sued and lose even more money.
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