Cryptocurrency exchange Poloniex is reimbursing lenders who lost funds in May’s “flash crash.” The crash of digital token CLAM, which fell by nearly 80 percent within an hour, triggered the failure of security measures in Poloniex’s automated liquidation system and wiped 1,800 BTC (almost $13 million at the time) of lender capital.
The exchange paid back 180 BTC to the first group of lenders affected by the crash in June, but it’s arranging to utilize a different strategy to reimburse the rest.
The exchange will refund trading costs to the affected clients until losses are recouped, according to a blog post.
“Every time you pay a trading fee, we will convert the fee to BTC and then credit you those fees each day,” the post stated. “Your first credit will include all the trading fees you have paid since June 6, 2019.”
Poloniex runs a peer-to-peer margin trading framework where lenders send their bitcoin to a pool so that others can trade with it. For their inconveniences, lenders are reimbursed with interest, while borrowers get a higher war chest to trade with.
At the time, the exchange faulted the flash crash on the high rate of sell orders and the low liquidity inside CLAM’s margin trading.