I wasn't naive. I've learned how the system worked by trial and error. I've done margin trading a few times, and it happened to me once that a position I had was liquidated to prevent going above my collateral. That was good. That made me feel confident that lending was very safe. The system had prevented any loss to occur. The software worked fine back then.
Poloniex is definitely responsible if something went wrong.
It's also very bad for this company, because frankly they're not newbies. Poloniex is one of the oldest trading places. It was the best and largest service some 2 years ago, but by pooling the loss of a the few among all their honest and loyal lenders... It is very, very bad for their reputation, to say the least.
Topic: Poloniex's taking money from its customers to cover its loss - page 9. (Read 2575 times)
I doubt as a margin lender you can do anything but to accept the outcome - given the fact that their terms of service would have had these things written down beforehand.
However, I don't really understand why they didn't take the appropriate actions that they talked about in their medium post BEFORE the flash crashes actually happened that led to these losses, as opposed to after. It just goes to show that margin lending isn't as risk free as everybody thinks.
They should have recognised these liquidity issues within certain markets way beforehand and they were pretty much the only exchange offering margin trading for these pairs at that point anyways.
However, I don't really understand why they didn't take the appropriate actions that they talked about in their medium post BEFORE the flash crashes actually happened that led to these losses, as opposed to after. It just goes to show that margin lending isn't as risk free as everybody thinks.
They should have recognised these liquidity issues within certain markets way beforehand and they were pretty much the only exchange offering margin trading for these pairs at that point anyways.
Another nail in the coffin for Poloniex. Circle must be really kicking themselves now for this acquisition.
It's a bit troubling they are hanging lenders out to dry like this. I'm surprised to be honest. Other exchanges have covered much bigger losses in flash crash situations. It really doesn't bode well for future market liquidity. Aren't lenders going to leave en masse?
It's a bit troubling they are hanging lenders out to dry like this. I'm surprised to be honest. Other exchanges have covered much bigger losses in flash crash situations. It really doesn't bode well for future market liquidity. Aren't lenders going to leave en masse?
I will. I have accounts at all exchanges, but I will stop doing business with Poloniex.
I've kept my Binance account when they've been hacked, because that can happen to everybody, I've also kept my Bitfinex account, because they were the victim of a shady partner (Crypto Capital), but I blame Poloniex here. And Circle which is behind. They should cover the loss. Bitfinex has lost $850 millions, but their customers haven't lost a cent.
I blame Poloniex their software, and their judgement. So does Yahoo:
https://finance.yahoo.com/news/poloniex-leaves-itself-open-legal-000333198.html
Are coinlend users affected?
Coinlend is only a tool. When you have BTC on Poloniex which was lend using Coinlend then you're affected. When you only have other coins AND/OR only have coins on other exchanges then you're not affected.
Are coinlend users affected?
Another nail in the coffin for Poloniex. Circle must be really kicking themselves now for this acquisition.
It's a bit troubling they are hanging lenders out to dry like this. I'm surprised to be honest. Other exchanges have covered much bigger losses in flash crash situations. It really doesn't bode well for future market liquidity. Aren't lenders going to leave en masse?
It's a bit troubling they are hanging lenders out to dry like this. I'm surprised to be honest. Other exchanges have covered much bigger losses in flash crash situations. It really doesn't bode well for future market liquidity. Aren't lenders going to leave en masse?
I see Poloniex as fully responsible. I blame their software.
We live in an age of superfast trading by bots, and there's a protection built-in with margin trading operations. As soon as the loss reaches the sum of money traded to begin with, the software should have terminated the trade in a second. It should be instant.
We live in an age of superfast trading by bots, and there's a protection built-in with margin trading operations. As soon as the loss reaches the sum of money traded to begin with, the software should have terminated the trade in a second. It should be instant.
The speed of their software is not the problem. The problem is one of imbalance. They allowed large asymmetric positions which dwarfed the actual market.
Quote from: https://medium.com/circle-trader/overview-of-btc-margin-lending-pool-losses-a2f0905aaa56
We’re pursuing the defaulted borrowers to get them to repay the BTC they owe to lenders.
What exactly does that mean? Pursuing them, legally? Poloniex's system shouldn't have allowed them to leverage positions that couldn't be liquidated. We've seen socialized losses before -- that's not a surprise to me. But they make it sound like they're coming after the defaulted borrowers. It wasn't their fault.
I see Poloniex as fully responsible. I blame their software.
We live in an age of superfast trading by bots, and there's a protection built-in with margin trading operations. As soon as the loss reaches the sum of money traded to begin with, the software should have terminated the trade in a second. It should be instant. Poloniex's blaming the lack of liquidity in the Clam market, that is a problem they should have been aware of, and lenders aren't responsible for it.
We live in an age of superfast trading by bots, and there's a protection built-in with margin trading operations. As soon as the loss reaches the sum of money traded to begin with, the software should have terminated the trade in a second. It should be instant. Poloniex's blaming the lack of liquidity in the Clam market, that is a problem they should have been aware of, and lenders aren't responsible for it.
I'd say that both lenders and Polo didn't properly analyse the risk.
On Polo's half, it should have been obvious not to provide leverage on such an illiquid and clearly manipulated market as CLAM. This isn't even the first time Clam has done this. There was a nearly identical crash back in October 2017.
Lenders, for their part, should have known better and factored in counter-party risk. Losses have been socialised before on exchanges, such as at OKCoin and Finex. Polo definitely isn't immune.
On Polo's half, it should have been obvious not to provide leverage on such an illiquid and clearly manipulated market as CLAM. This isn't even the first time Clam has done this. There was a nearly identical crash back in October 2017.
Lenders, for their part, should have known better and factored in counter-party risk. Losses have been socialised before on exchanges, such as at OKCoin and Finex. Polo definitely isn't immune.
Quote
Crypto exchange Poloniex revealed in a post Thursday that lenders in its bitcoin margin lending pool suffered a loss of 1800 BTC — roughly $13.5 million at current market prices — due to a flash crash in the Clams (CLAM) market on May 26.
what a travesty. they shouldn't allow leverage on such illiquid markets. bitcoin and the larger altcoins are one thing, but with low volume altcoins like this---especially on a low volume exchange like poloniex---it's a disaster waiting to happen.
there's no way they're gonna claw back all those coins from borrowers. i don't even think they legally can. why would borrowers deposit extra money to cover losses above and beyond what their positions entailed?
https://medium.com/circle-trader/overview-of-btc-margin-lending-pool-losses-a2f0905aaa56
Scary. I used to think lending money on Poloniex or Biftinex was safe. Not anymore.
So, if you were lending money on Poloniex, you've lost 16.202% of it... Man, that hurts!
Scary. I used to think lending money on Poloniex or Biftinex was safe. Not anymore.
Quote
Today, we recognized the generalized loss across lenders in the BTC margin lending pool. As a result, the principal of all active BTC loans as of 14:00 UTC today has been reduced by 16.202%.
So, if you were lending money on Poloniex, you've lost 16.202% of it... Man, that hurts!
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