Poloniex using trading fees to repay $18 million in lost BTC
In May, Poloniex suffered what was referred to as a “flash crash” that led to nearly 1,800 SegWitCoin (BTC), worth approximately $20 million, being wiped away from the margin trading lending pool. The company offered to reimburse users, and it appears that they have come up with the perfect solution, opting to use trading fees as a means to repay those who lost BTC.
The company released a post on their blog announcing how they would pay back those who suffered what was referred to as “generalized losses.” They explained that they had taken the first step on June 14 when they distributed nearly 181 BTC to users who had been impacted by the loss, but that represented just 10% of the overall losses.
According to the post, Poloniex will not require users to pay trading fees until the full amount of their losses are recovered. In essence, these users will receive a credit that can be used only towards the trading fee. Then, when the total amount is paid off, the trading fees will resume.
“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,” Poloniex explained in their post.
Poloniex had introduced margin trading using Bitcoin SV for international users in April of this year. This enabled users to be able to hold the real Bitcoin while lending it to others so they could gain interest as the market changed. While appearing to be successful in other countries, they had ended margin trading in the U.S. in October of last year, explaining that this met the “regulatory requirements” for operating in the U.S.
The process seemed to be working well, that is until May 26 when all hell broke loose. At that time, the price of CLAM saw a flash crash, losing more than two-thirds of its value in a day. That caused a large number of margin loans to default automatically, which resulted in the loss of 1800 BTC that were in the margin lending pool.
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