Cryptocurrency News Today: Poloniex to repay $18M worth of Bitcoin lost in margin trade flash crash with trading fees
Cryptocurrency exchange Poloniex has announced a new scheme to reimburse users affected by an unexpected “flash crash” that saw 1,800 BTC ($20 million) wiped from its margin trading lending pool in May.
An official blog post promises to return trading fees (in Bitcoin) to impacted lenders until all losses have been repaid.
“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,” wrote Poloniex.
Lenders are supposed to receive interest for doing so, and borrowers must keep collateral to ensure that debts can actually be repaid.
Bitcoin margin trading and flash crashes do not mix
In late May, the value of an obscure token named Clams (which was available for margin trading through Poloniex) suddenly crashed by almost 80 percent in under 45 minutes.
Usually, this scenario should trigger the exchange to close the positions of borrowers – a move designed to protect the capital of Cryptocurrency lenders by cutting borrower’s losses as soon as possible to ensure they can repay their debt.
As it turned out, the sheer velocity of the Clams market crash ac