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Victims Of Poloniex Crash Get A Refund

Victims Of Poloniex Crash Get A Refund
Exchanges / Breaking News

Back in June of this year, Poloniex, a part of the Circle firm crashed as a result of the collapse of an alt coin known as CLAM. Here’s a recap of what happened according to Yahoo Finance:

“On May 26, altcoin $CLAM collapsed more than two thirds of its value during the day, resulting in the margin lending pool incurring a more than $13 million USD loss in today's price of bitcoin. Now, Poloniex is tapping into 1,800 BTC from the principal of active BTC margin loans to cover the loss to the lending pool. In margin trading, exchanges and traders can lend crypto at an interest rate for borrowers to trade, hopefully at a gain. Users have to pay back what they are lent. When a borrower is unable to pay back the loan, they default, losing money they didn’t have to begin with. Some trading CLAM, a coin with low liquidity, began to default on their loans as the value of the coin dropped, making them unable to pay since their assets were now worth far less than when they borrowed.”

Many,  many days later, it’s now reported that victims of this will be receiving a Bitcoin refund, according to a blog post published by Poloniex themselves. We should point out that in the wake of the crash, Poloniex did make some effort to refund some users, though many victims have been left out of pocket as a result of this.

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So, what’s happening?

It’s a bit of a weird one this because Poloniex aren’t actually going to pay out direct refunds to those lenders, instead, the exchange is going to refund trading fees from trades made by the lenders who lost out in June. Each time they carry out a trade, the fees will be refunded to them until the refunds equal the value of the Bitcoin they lost in June. Here’s what the official blog post states:

“Starting later in August, if you are an impacted lender, you will be credited your Poloniex trading fees until your losses are fully recovered. Every time you pay a trading fee, we will convert the fee to BTC and then credit you those fees each day. Your first credit will include all the trading fees you have paid since June 6, 2019. (You will see a repayment tracker in your account soon.) Our work to make customers whole isn’t limited to our first payment or this new step of crediting trading fees. We are actively pursuing other strategies, and will update you when we can.”

Honestly, this means it could take an age for some lenders to see any significant refunds, it’s a very unorthodox way to operate, but I guess a lack of legislation and regulation within the industry means that exchanges can get away with doing this sort of thing. In the long run, it seems that lenders are relieved that they at least now have access to some sort of reimbursement, no matter how long it might take for them to recover their money! 

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