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Margin lenders on Poloniex lost 1,800 BTC due to flash crash in CLAM market

Source: Poloniex (Twitter)

Fri, 07 Jun 2019, 10:18 am UTC

Circle-owned cryptocurrency exchange Poloniex has announced margin lenders on its platform recently lost around 1,800 BTC (approximately $13.5 million) due to a “severe price crash.”

In an online post dated June 06, the exchange said that a sudden, severe price crash in CLAM led to “a number of margin loans to default, resulting in a roughly 1800 BTC generalized loss in the Poloniex BTC margin lending pool.”

Due to the incident, Poloniex said, the principal of all active BTC loans has been reduced by 16.202%. The exchange estimates the incident to have affected 0.4% of its users.

“Lenders impacted will see the reduction in their accounts when they next log in. All of the defaulted borrowers’ accounts were frozen after they defaulted and will remain frozen until they repay their loans and comply with Poloniex terms of service,” Poloniex said.

Further explaining the reasons behind the incident, it said that the “velocity of the crash and the lack of liquidity in the CLAM market made it impossible for all of the automatic liquidations of CLAM margin positions to process as they normally would in a liquid market.”

Moreover, as a considerable amount of the total loan value was collateralized in CLAM, borrowers’ positions, as well as their collateral, lost most of their value simultaneously, it said.

Last month, Poloniex resumed its services in Washington after receiving a new license from the Washington State Department of Financial Institutions. Meanwhile, it stopped offering trading in nine cryptocurrencies in the United States, citing the lack of regulatory clarity in the country.

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