By the end of May 2019, some traders of the Poloniex-owned Crypto Margin trading platform lost a lot of money. This is due to the fact that the cost of the not so popular CLAM crypto asset experienced a sharp and unexpected collapse. This led to the loss of approximately 1800 bitcoins (BTC).
Trying to rectify the situation, Poloniex recently announced that in August they will begin to recover the losses of margin traders. The exchange will make a day off for calculating trading fees, adding that soon users will “see the repayment tracker in their account.”
The first step on the part of the exchange was made on June 14, after the company announced that it had proportionally distributed 180.73606744 BTC between the affected creditors.
The cost of CLAM began to decline on May 26 at about 20:15 UTC, just two hours later it fell from $ 19.40 by almost 80%. This sudden failure led to the loss of money that belonged to margin lenders, who allocated part of their BTC to margin traders who borrowed them with interest.
Poloniex has some kind of loan pool, which sums up funds allocated by lenders that are designed to satisfy orders from margin traders.
In addition, Poloniex said that the loss on the loan pool was caused by the fact that the CLAM market did not have enough liquidity to automatically eliminate the CLAM margin positions in the event of a sharp market decline.
In addition, a substantial part of the overall CLAM margin position was secured by collateral in the CLAMs themselves, that is, the prices of both margin positions and collateral fell simultaneously.