Poloniex revealed that a flash crash in the CLAM market had a domino effect that led to a loss of roughly $13.5 million in its BTC margin lending pool. | Source: Shutterstock
By CCN: U.S.-based cryptocurrency exchange Poloniex has revealed that its lenders lost $13.5 million in a sudden CLAM price crash. To cover its losses, the exchange slashed the principal of active BTC loans by approximately 16%. Now outraged Poloniex users are calling the move a “theft” and considering launching a lawsuit against the exchange.
An Eye-Popping 1,800 BTC Lost in Two Hours
On May 26, CLAM’s price fell from $20.30 to $6.10 in a two-hour flash crash. The sudden price crash caused a number of margin loans to default on Poloniex. As a result, Poloniex margin lenders lost 1,800 BTC (worth $13.5 million at the current market rates), the cryptocurrency exchange stated in a blog post yesterday.
Due to the velocity of the crash and the lack of liquidity, the exchange was unable to process any automatic liquidations of CLAM margin positions. 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.”
Users Say 16.2% Haircut Is a ‘Theft’
To cover its losses, Poloniex took a 16.2% haircut from all active BTC loans on the platform and froze all defaulted borrower accounts until they repay their loans to the lenders.