On May 26, Crypto exchange Poloniex, backed by Circle, which in turn is backed by Goldman Sachs, tweeted that a “severe price crash in the CLAM market caused a number of margin loans to default”, which resulted in a loss of 1800 Bitcoins (BTC) for non-US customers. The exchange followed up today saying that they “recognized the loss among lenders” and tried to offer reparations,
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%. This impacted 0.4% of Polo users. Details: https://t.co/s7Ql6j2sw3
— Poloniex Exchange (@Poloniex) June 6, 2019
Naturally, users are furious at what happened and how Poloniex is handling the situation – and most certainly the way that they have communicated what has happened to those 0.4% of users who have been affected. By saying that the principal of all active loans has been reduced by 16.202%, what Poloniex means that 16.202% of the lender’s Bitcoin is gone. As Reddit user ILikeToSayHi puts it,
In a blog post, Poloniex said,
We’re pursuing the defaulted borrowers to get them to repay the BTC they owe to lenders. As we recover funds, we will return them to affected lenders. We’re also exploring other ways to help defray margin lender losses. We will continue to communicate with impacted lenders on the status of these efforts.
Crypto investors had already begun moving away from Poloniex.