Cryptocurrency exchange Poloniex is moving forward with compensation for lenders who lost funds in a May 2019 “flash crash.” The crash of digital token CLAM, which fell by almost 80 percent within an hour, triggered the failure of safety measures in Poloniex’s automated liquidation system and wiped 1,800 BTC (about $13 million at the time) of lender capital.
The exchange paid back 180 BTC to the first batch of lenders affected by the crash in June 2019, but it’s planning to use a different method to repay the rest.
The exchange will refund trading fees to the affected users until losses are recovered, according to a published blog post.
“Every time you pay a trading fee, we will convert the fee to BTC and then credit you those fees each day,” according to the post. “Your first credit will include all the trading fees you have paid since June 6, 2019.”
Poloniex runs a peer-to-peer margin trading system where lenders send their bitcoin to a pool so that others can trade with it. For their troubles, lenders are repaid interest, while borrowers get a bigger war chest to trade with.
At the time, the exchange blamed the flash crash on the high rate of sell orders and the low liquidity within CLAM’s margin trading.