Poloniex attacks circle clam flash crash
Alt coins

New Poloniex bosses attack Circle, plan refund for those hit by CLAM price crash

In a scathing blog post, the new management said: ‘We fully recognize the situation could have been handled more professionally’

The Poloniex cryptocurrency exchange has offered an update on a major price crash that triggered a loss of 1,800 BTC back in May 2019—and delivered what appears to be a scathing rebuke to the company’s previous owners.

The CLAM flash crash (Photo: Messari).

In a blog post apprising affected users of the latest developments, Poloniex apologized for a lack of communication under Circle. Unflinchingly, it added: “We fully recognize that the situation could have been handled more professionally and know that we need to gain your trust.”

Problems began for Poloniex when the CLAM token suffered a flash crash, losing nearly two thirds of its value in a single day—and causing substantial numbers of margin loans to default. Poloniex controversially spread the approximately 1,800 bitcoin loss across the entire lending pool.

Although Circle did take two steps to reimburse affected consumers, just 53 have been fully reimbursed, with the new executive team admitting: “We know this isn’t nearly enough.”

Putting things right?

Poloniex now says it is introducing four new measures that are designed to ensure impacted customers are no longer out of pocket.

All of those who have been identified as being affected have received a payment of 0.0047 bitcoins (BTC)—currently approximately $25. The company estimates that about 1,000 people incurred losses that fell below this level, effectively meaning they have now been fully reimbursed.

For those still at a loss, another bulk payment is going to be made next month that will provide compensation for lending fees incurred since last June. Future fees will also be reimbursed until they are made whole. The fourth—and perhaps most ambitious—measure will see Poloniex attempt to recoup funds from the borrowers who defaulted on their loans.

Change in policy

The Poloniex blog post added that measures are now being enforced that it claims ensure that such an incident cannot happen ever again.

Lending and margin markets are now being removed for four digital assets that the exchange describes as illiquid—including CLAM. It is hoped that audits and automated triggers will help the company to better assess levels of risk. Poloniex is also going to be “implementing further market protections to help mitigate major price slippage and over-concentrated positions.”

In a final attempt to establish a clean break from Circle in the minds of its user base, the blog post added: “We’re committed to regaining your trust through repaying losses, building healthier markets, and improving our communication. We promise to provide monthly updates, no matter how large or small.”

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Connor Sephton is a journalist with an interest in cryptocurrencies, personal finance, and financial inclusion—as well as the challenges the crypto industry faces in achieving mainstream adoption. He owns cryptocurrencies.