Bitcoin Forum

https://medium.com/circle-trader/overview-of-btc-margin-lending-pool-losses-a2f0905aaa56

Scary. I used to think lending money on Poloniex or Biftinex was safe. Not anymore.


So, if you were lending money on Poloniex, you've lost 16.202% of it... Man, that hurts!

what a travesty. they shouldn't allow leverage on such illiquid markets. bitcoin and the larger altcoins are one thing, but with low volume altcoins like this---especially on a low volume exchange like poloniex---it's a disaster waiting to happen.

there's no way they're gonna claw back all those coins from borrowers. i don't even think they legally can. why would borrowers deposit extra money to cover losses above and beyond what their positions entailed?

I'd say that both lenders and Polo didn't properly analyse the risk.

On Polo's half, it should have been obvious not to provide leverage on such an illiquid and clearly manipulated market as CLAM. This isn't even the first time Clam has done this. There was a nearly identical crash back in October 2017.

Lenders, for their part, should have known better and factored in counter-party risk. Losses have been socialised before on exchanges, such as at OKCoin and Finex. Polo definitely isn't immune.

I see Poloniex as fully responsible. I blame their software.

We live in an age of superfast trading by bots, and there's a protection built-in with margin trading operations. As soon as the loss reaches the sum of money traded to begin with, the software should have terminated the trade in a second. It should be instant. Poloniex's blaming the lack of liquidity in the Clam market, that is a problem they should have been aware of, and lenders aren't responsible for it.

What exactly does that mean? Pursuing them, legally? Poloniex's system shouldn't have allowed them to leverage positions that couldn't be liquidated. We've seen socialized losses before -- that's not a surprise to me. But they make it sound like they're coming after the defaulted borrowers. It wasn't their fault.

The speed of their software is not the problem. The problem is one of imbalance. They allowed large asymmetric positions which dwarfed the actual market.

Another nail in the coffin for Poloniex. Circle must be really kicking themselves now for this acquisition.

It's a bit troubling they are hanging lenders out to dry like this. I'm surprised to be honest. Other exchanges have covered much bigger losses in flash crash situations. It really doesn't bode well for future market liquidity. Aren't lenders going to leave en masse?

Are coinlend users affected?

Coinlend is only a tool. When you have BTC on Poloniex which was lend using Coinlend then you're affected. When you only have other coins AND/OR only have coins on other exchanges then you're not affected.

I will. I have accounts at all exchanges, but I will stop doing business with Poloniex.

I've kept my Binance account when they've been hacked, because that can happen to everybody, I've also kept my Bitfinex account, because they were the victim of a shady partner (Crypto Capital), but I blame Poloniex here. And Circle which is behind. They should cover the loss. Bitfinex has lost $850 millions, but their customers haven't lost a cent.

I blame Poloniex their software, and their judgement. So does Yahoo:

https://finance.yahoo.com/news/poloniex-leaves-itself-open-legal-000333198.html

I doubt as a margin lender you can do anything but to accept the outcome - given the fact that their terms of service would have had these things written down beforehand.

However, I don't really understand why they didn't take the appropriate actions that they talked about in their medium post BEFORE the flash crashes actually happened that led to these losses, as opposed to after. It just goes to show that margin lending isn't as risk free as everybody thinks.

They should have recognised these liquidity issues within certain markets way beforehand and they were pretty much the only exchange offering margin trading for these pairs at that point anyways.

I wasn't naive. I've learned how the system worked by trial and error. I've done margin trading a few times, and it happened to me once that a position I had was liquidated to prevent going above my collateral. That was good. That made me feel confident that lending was very safe. The system had prevented any loss to occur. The software worked fine back then.
Poloniex is definitely responsible if something went wrong.

It's also very bad for this company, because frankly they're not newbies. Poloniex is one of the oldest trading places. It was the best and largest service some 2 years ago, but by pooling the loss of a the few among all their honest and loyal lenders... It is very, very bad for their reputation, to say the least.

At the high, the marketcap of Clam was about 8585 BTC, and at the May 25 low, the marketcap fell to about 1939 BTC, or a difference of about 6645 BTC. Poloniex allows for 2.5x margin trading, which means the value of the margin longs, plus the value of the collateral was just under 35% of all Clam outstanding. This is assuming all margin long positions were opened at the high and sold at the low, that margin was maxed out on all positions, and all positions were secured entirely by Clam.

The losses exceed the trading volume of Clam during the flash crash, so it is probably safe to assume not all positions were sold immidiately. If no Clams were sold, and their value was written down to zero, as few as 21% of Clams outsanding could have been in open positions. I would believe that Poloniex sold the open Clams positions they were unable to sell in the open market, probably at a fairly large discount.

Poloniex is the only major exchange Clam trades on, so any major price action would have occured on Poloniex. Overall, the losses are the result of poor risk management on the part of Poloniex. They should not have allowed such a large percentage of coins outstanding to be bought in margin long positions. I also suspect they initially were automatically closing out margin positions in mass before someone pulled the plug to automatic licquidations that probably caused a large portion of the price decline.

I don't think this would have happened on a more professional exchange.

I'm amazed at how pisspoor Circle's handling of Poloniex has been. They've pretty much done nothing with it. Even if they're only placeholding they should at least make an effort for the existing users.

As for this, they allowed this to happen. They should be picking up the bill. Stuff like this will only speed up its drive into oblivion. In a space filled with utter waste $400 million for this looks like one of the biggest cash bonfires of all.

I can only agree.

Allowing huge margin trading on that Clam sh*tcoin was unprofessional, and now asking their customers to pay for that mistake is even worse. I've started to withdraw my funds... You wonder what's next because I cannot a trust a company where this happens. No investor can. Your coins are not safe at Poloniex.

How are you calculating the 35%? Based on your assumptions, I'm doing: -1800 = (1939/8585)x - (2.5/3.5)x, which gives 3,685 BTC for the longs and collateral, or 43% of all CLAM.


You are right. 444 BTC of volume occurred in the first five minutes, but that only took the price down to 180K sat. There was less than 150 BTC down from there to 53K sat. That's not enough to account for a 1800 BTC loss. At most, it accounts for only 650 BTC.

The change in market cap was 6647 btc. I got this based on 3,625,200 outstanding, a high price of 0.00236825 btc, and a low price of 0.000535 btc. The high market cap was 8585 btc.

The 1800 BTC loss made up 20.96% of clams, if they were bought at the high. In other words, you could spend 1800 btc to buy 20.96% of clams outstanding at the high price. At 2.5x leverage, Poloniex's customers need to have collateral valued at 40% of margin loans outstanding, calculated by x = 1/2.5. 40% of 20.96 is 8.38, so an additional 8.38% of clams outstanding would need to be used as collateral for an 1800 BTC margin loan, bringing the total to 29.34% of clams.

I believe the above is actually how the margin system still works on Poloniex, and this actually results in traders being able to get 3.5x leverage, because they can use 1 BTC to buy 3.5 BTC worth of a position if the collateral is the same as the trading pair. I was able to replicate my mistake in saying that 35% of clams outstanding were used in margin loans plus collateral by incorrectly assuming a total of 2.5x leverage, or borrowing 1.5x the value of the clam collateral, or having equity of 60% of the margin loan.

The 30 minute tick with 444 BTC traded has a low price of 0.00175 BTC, which is at most ~253,000 clam, or ~6.9% of clam outstanding. The following two 30 minute ticks only have about 20 BTC traded in each tick, with a low of 0.00112 BTC, with a maximum traded of about 35.7k clam, or under 1% of clam outstanding.

Most exchanges that offer margin lending would cover losses in these types of situation. There is language in the TOS that says the lenders are taking the risk that borrowers will be unable to repay the margin loans, and lenders may not be repaid the full amount.

The reason exchanges will often cover losses is because if they do not, lenders will not want to use the platform to lend, which will lead to higher interest rates for borrowers, which will lead to lower trading volumes and lower profits for the exchange. I guess Poloniex thought the 1800 btc loss was not enough to justify keeping confidence in their lending platform. If they had the money, they could have bought the clam, and sold it over time at a higher price, and prevented the market from dumping from all the margin liquidations. I expect most lenders to stop using Poloniex to lend out their coins.

This will likely push interest rates on other lending platforms up as well, given the fact that the market is now given a lot more awareness about how potentially risky their investments are, while they previously thought it was something that was risk free.

I'm surprised that Polo isn't offering to at least compensate in some way, though, given the fault is probably partially on them for offering margin trading on illiquid markets anyways.

I doubt their 'debt recovery' will go that well anyways. It's probably extremely difficult to get anyone, especially people with high amounts invested at the time to pay back their dues, especially when their positions should have automatically closed in the first place.

Thanks. I see from your calculations that Clam would be treated as having zero value. That would tie in with my equation where 1939 is replaced by 0.

I'm getting legal advice, and I've received confirmation that pooling losses is illegal.
The default is 100% due to Poloniex's negligence. If the other trading platforms didn't allow margin trading on CLAM, that's because they were smarter.

Be prepared for a long battle if you seek remedy through the courts. It goes without saying that Gox claimants are still waiting for justice after five years.

It is possible there was a higher percentage of clam in margin long positions and serving as collateral. I think most likely, Poloniex initially automatically market sold some margin long positions, stopped this, and sold the remaining clam held in customer accounts in margin long positions via an OTC trade.

Please see this:

Are you working for Poloniex?

Actually, I'm still getting the facts, and I have yet to understand how Poloniex took money from its clients.

I'm a victim here, my money was lent at Poloniex. It was not sitting waiting for an offer, it was lent. On Friday, the sum of money I had lent has been reduced by 16%. But the loans I had were still running. And that money, it was used by people doing some margin trading. So, those people doing margin trading at the time, have they experienced a 16% reduction of their trades?

We're talking about 1,800 BTC here. If I look at the daily volume traded at Poloniex, it's very, very substantial.

No I have never been affiliated with Poloniex, and after this incident I probably wouldn’t be interested in working for them if an opportunity presented itself.

I have an account with Poloniex that has dust amounts due to not closing out entire positions when trading and I have lent on Poloniex among other exchanges in the past.

Based on the available public information, Poloniex is claiming there were 11,250 btc, approximately in outstanding margin loans on the day of the flash crash. They are claiming that some positions were force liquidated and upon liquidation, after bringing account balances down to zero, there remains a deficit of 1800 btc that cannot be repaid. They have not said this, but I presume they kept these margin loans outstanding so lenders could not withdraw coin that should be deducted from their balance.

It is a well known risk that margin loans may not be repaid in full. This risk is disclosed in the TOS of any exchange that offers margin loans. Most exchanges will cover margin losses in order to maintain confidence in their lending markets, that will lead to higher liquidity and trading volumes. In this case, Poloniex probably decided the cost of covering the losses exceeded the additional revenue that continued margin lending will lead to.

Not everyone who had a margin loan outstanding at the time defaulted nor has negative equity, for example a customer who borrowed btc to bet on ETH going up presumably can repay their margin loan as agreed. Instead of deducting the balance from specific lenders whose loans defaulted, Poloniex socialized losses among all btc lenders. It is unclear to me if this specific action is legal and in accordance with their TOS, but I also understand why they would want to be this,  and I would presume they obtained legal counsel to advise them the legality of this action.

Polo likes to socialize losses

https://bitcointalk.org/index.php?topic=499580.0

Reading this belatedly and just only now recalling that I used to loan out quite heavily on Poloniex in early and mid 2017. Didn't know it at the time, but my BTC was snapped up at really big interest rates (if I recall some even almost 1% daily) because of the huge FOMO going on especially in the alt markets. I made some really good profit just loaning out 10-30 day term loans. Had no idea I was exposing myself to "socialised losses".

The risks we take. As if leaving our funds on exchanges aren't enough risks. Glad I gave up doing that. Can't bear thinking of what happens if someone decides I should share their loss...

11,250 btc?
Source, please. It sounds crazy that such a minor crypto was so heavily traded...

But I think we've talked enough about what happened on May the 26th. What needs to be explained is what happened on Friday the 14th of June. I've described what happened to me on post #23, just above.

That number represents total loans across the platform, which is quite different from Clam trading volume. It is calculated by working backwards from the 16% and BTC1800 haircut.



Good times. I remember getting 1% daily as well for a short while.  8)

Yes, I was there too. Nowadays, I've lost 16% and it will take me many months to get them back. On other platforms, of course...

Nobody has talked about it, but one thing is strange:

Clam's crypto-crash was on May the 26th, but Poloniex took money from its customers on June the 6th. For 10 days, they had covered the loss. And I didn't even knew that the Clam crypto-crap had crashed. Then, suddenly, Poloniex changed its mind, and decided to make their customers pay.

Good catch. I didn't even notice the dates.

They may have overestimated their ability to convince defaulted borrowers to pay up. A few poor saps probably deposited coins, but they probably switched gears once they realized the loss won't be recovered. This seems to be the extent of their legal threats to borrowers now:


Good luck with that, Poloniex. ::)

Poloniex has customers all over the world, if those who defaulted were in Russia or Lebanon, they will need more than luck...

The 11,250 figure is based on the losses and how much was taken from your lending balance. The actual figure could be higher, but probably not lower, depending on mainly if they covered some of the losses.

On May 26, Poloniex suffered major losses. On June 14, Poloniex socialized these losses on lenders of BTC at the time. I can't say with authority why there was the long delay, or what happened in the meantime. I would speculate on May 26, Poloniex took over the loan clam positions from those with negative equity and held the position for three weeks. I think they were hoping the price would increase enough so they could offload the position either over time, or in an OTC trade at a high enough price so all loans could be repaid. Poloniex could have continued renewing BTC based loans to cover the short BTC position, and so lenders would not start withdrawing to other lending platforms. Once they saw the price of clam was not going to quickly go back up, they imposed losses on btc lenders.

If you did not have a BTC loan open as of May 26, you may have a valid cause of action. The reasoning for this is simple, you should not have to cover losses for loans that you did not have open at the time of the loss.

If some lenders were able to withdraw their coin from poloniex, and the percentage of your coins taken to cover the losses was higher because of this, you may have a valid cause of action for only your additional losses. This would not apply if Poloniex seized other assets from these accounts that withdrew to cover their portion of the losses based on their btc loans outstanding as of May 26.

Alleluia!
Things are getting better.

The dates are as follows.

May 26th: 1,800 BTC loss for Poloniex because of the Clam crash.
June 6th: Poloniex covers its loss by seizing money from its customers.
June 14th: Poloniex has realized something went wrong, and it starts to reimburse its customers. I have about 10% back, and in an email, Poloniex wrote that "You can expect additional payments in the future."

It's great, great relief, even if I'm still waiting for the remaining 90%.

I am guessing Poloniex sent some kind of demand to customers who have negative equity to repay the negative equity and some customers repaid, totaling about 180 btc. Poloniex possibly has some kind of legal reserve in case some customers sue it in relation to this incident, and this risk would be removed once they repay all their lenders, so they may not need customers to repay 100% of their negative equity.

I don't quite understand this, they have faulty lending system but make their customers pay the losses?
so was the clam price artificially pushed high to exploit this opportunity?
or it was just simply a coincidence sudden price crash caused this

the Circle team are probably the worst people in the whole world handling business. they have no idea what they are doing and in all these years they have not even gained smallest experience whatsoever. i remember a couple of years ago they even attacked bitcoin and blamed it for their failed business and losses! not to mention that Poloniex was once number one exchange before they were bought by Circle :D

glad to hear it. i was amazed they left lenders in the lurch and am glad to see they've seen the error of their ways. screw over your lenders like that and liquidity will suffer!


it was poloniex's fault, exacerbated by dumb borrowers margin longing shitcoins with no liquidity. they allowed buyers to build leveraged positions much larger than actual market liquidity could support. then came a flash crash that wiped everyone out. borrowers were heavily in default and poloniex refused to cover those losses. seems like they are changing their minds now.

Polo went downhill before Circle jumped in. During the spring and summer of '17 with the influx of new user registrations, they completely went to pot. Trade engine was lagging, you couldn't get verified to get your money out, no response from CS for months if ever. It was this that lead to the exodus of OG traders.

Thank you everyone for your support.
 8)

It's only a small victory, though. Poloniex has only reimbursed me 10%...But at the very least, with this they acknowledge that what they did was not correct.

Having lived through a few "socialised losses" over the years, I remain somewhat sceptical. That initial ~10% could represent the easiest funds to recover from overdrawn accounts, or perhaps a portion of Poloniex's reserves/operating funds.

At least they seem to be repaying in BTC - like for like - rather than some internal token which has its value fixed to the exchange rate on the day of the event.

With Poloniex?
I think I've had some money in my lending wallet at Poloniex continuously since mid 2016. I had never experienced any "socialized loss". Do you think I was lucky? Anyway, I'm still missing 90% of the 16% Poloniex seized from my account, and that's substantial money. So I'm not so lucky...

I've been affected by losses at mtgox, Vircurex, bter, Cryptsy, Cryptopia, etc. Some are fairly absolute (such as Cryptsy abruptly going out of business) but others have been some event (such as a hack) which resulted in "haircuts" being applied to customer balances.

So I was speaking generally about past events with other exchanges, not specifically Poloniex. Sorry for not making that clear.

OK, thanks.

I've always been very, very cautious about choosing exchanges.
I've used Poloniex, Bitfinex, Binance and Kraken. That's it.

And I've never had any bad experiences, besides a few delays when making deposits or withdrawals.

Poloniex was my first bad experience (after several good years)! And I hope the last...

Is there some lenders club who negotiating with the exchange, preparing lawsuit etc?
How can I join?

Can you please answer the following questions:

Did you have 16% of the money in your lending wallet seized on June 6th?
Did you get about 10% back on June the 14th?
Have you been exchanging with Poloniex already?
Are you a US citizen?
Where do you live? (I'm based in central Europe).

Poloniex actually closed margin borrowing and lending to US customers several months ago. You also need to verify your account to deposit. There should not be anyone from the US who lost money.

Did you have 16% of the money in your lending wallet seized on June 6th? yes
Did you get about 10% back on June the 14th? yes
Have you been exchanging with Poloniex already?  i've go some clarification from support team
Are you a US citizen? no
Where do you live? (I'm based in central Europe). russia

my mail is stormos at gmail

One thing I forgot to ask, have you ever owned any CLAM?
That's the big idea, I've never owned any CLAM so I should not suffer from that sh*tcoin's collapse.

Anyhow, things won't be easy. We're in different countries, and Poloniex is in America.

CLAM was airdropped to all bitcoin holders. I redeemed it and sold immediately at another exchange years ago.

I think we should hire american lawyer to represent our interests

I strongly believe It wasn't just a shitcoin collapse but a fraud and Poloniex was a tool. I can show it with a numbers

We have one problem, and it's a big problem. There's not enough of us. 1,800 BTC have been seized and that's huge, so there should be many of us with the same problem. I created this topic to find other victims, where are they?

If you've been a victim of Poloniex in this affair, please participate in this topic.

I've found a willing lawyer if there are people interested, but the status of the case will depend of the number of victims...

i heard some victims were blocked by polo because their over-emotional conversations with support

Came here thanks to this  (https://bitcointalk.org/index.php?topic=5158614.msg51621776#msg51621776)message.

 Now, I was personally not affected by this, but I'm part of a Lending group on telegram and some users have indeed been affected. Every update I've received comes from there, and I've just read this posted today:


From there, I believe the exchange is trying to make ammends, but I'm not sure everyone sees it the same way

Could you please invite me to the group?

The problem is far from solved, I'm still missing 90% of my money, like all the pople affected I believe.

I'm not very familiar with Telegram, can you giver the name of that group? Can anyone join, or do you need to be invited?

You may also tell the other guys about this topic, thanks.

I'm really sorry to hear that, hope it gets sorted out


Yeah, sure! It's the group from the lending bot Coinlend; it's an open group and the link is the following: https://t.me/CoinlendOfficial (https://t.me/CoinlendOfficial)

have you managed to track down other victims? at 1800 BTC generalized loss (1620 BTC if 10% was refunded) there must be some big lenders affected. i'm surprised at how quiet this story has been.

i'm assuming polo hasn't said a word since they refunded the 10%? they should at least establish some sort of payment plan out of their profits like bitfinex did after they were hacked.

I don't think poloniex plans on using money from their profits to repay lenders. I believe their intention to solely use coins recovered from defaulted borrowers. At least this is my understanding

That is my understanding as well, and that's what's stated on their announcement since the beginning. They've shown no intentions to make amends.

I personally think that they should at least take some responsibility over this ordeal. They were stupid enough to let the CLAM/BTC pair to be traded on margin despite knowing full well that the liquidity of clams were extremely low, as I've stated before. They even acknowledged this themselves. If you acknowledge that, then why aren't you taking responsibility?


Where did you get this info? If this is true, then it's unprofessional by Polo. Users will get emotional at times, especially when their money's at stake.

private conversations with strangers from russian telegram polo chat.

I blame following polo's mistakes in our loses
Intransparency. Poloniex lending market is intransparent compare to bitfinex where you know total and your personal exposure to a collateral asset. Obviously polo have changed their loss management policy after the incident
Lack of risk management procedures on the exchange side. Our funds was the main (and only) driver for the whole pump. Probably pumper(s) had intention to rob us at the very beginning. In this case, polo should seize pumper’s assets and give it to us.
If polo will fail to obtain funds from borrowers/pumper, we should get portion of 15% lending fee until full repayment

I've found only 3 other people so far! Don't know where to find the other victims... And no news from Poloniex since they gave 10% back. I've asked support about waht's next, but no answer so far...

Now getting legal advice, I've been told that proving there was a fraud would be very difficult, unless having access to Poloniex's whole data, but there was definitely a mistake. Things like this, that CLAM crash because of crazy margin trading, should never happen.

Polo victims telegram group https://t.me/joinchat/Dn0zBRZOyaYnp6O8oDsLAw

Thanks for info, but actually, I won't join that group. It's quite possible it was a bot which made the CLAM sh*tcoin crash. I don't trust bots, Poloniex should not allow them...


Thanks a lot, I've just joined that group. We shall be all individual private investors there.

I wouldn't think fraud would be the angle here. Something like negligence with regard to capital and margin requirements, maybe.

Does anyone know what jurisdiction this case would fall under? Did the lawyer you spoke to say? As a US company, capital and margin requirements would normally be covered by CFTC regulations. Since US persons aren't allowed to lend or margin trade on Poloniex, I'm not sure they apply here.

I see rates are down to 2% apr again. I guess lenders there are just gluttons for punishment? :-X

Yes, negligence, but there's also the fact that socializing losses is illegal in the US. Poloniex says it's OK because it wasn't offering its services to US customers... Easy answer!


Yes, very stupid. Now that we know that lending is unsafe at Poloniex, doing it to earn a measly 2% is plain stupid.

There is language in their TOS that I believe relives Poloniex from legal responsibility from covering the losses. This means that only mechanism to force Poloniex from taking responsibility is the market. In other words, you need to be willing to vote with your coin, and let it be known this situation is why you are no longer using their platform -- if enough other people do the same, they may decide to use their own money to repay some of the losses; I don't think this will happen unless lending rates on Poloniex become much higher than on competing platforms. If borrowing rates on Poloniex are higher than on other margin platforms, traders will not want to use Poloniex because they can trade on margin elsewhere with less costs.

I was not personally affected, and I cannot lend on Poloniex, but this situation makes me to want to not use Poloniex in the future.

I checked coinlend.org and I see around 3.1% p.a. compared to 2.1% on bitfinex and 1.1% on quoine. Maybe there are enough people not paying close attention to bid down the interest rates this low.

I think at a minimum, lenders would need an 8% pa premium over competitors to make the risk worth it.

terms are not enforceable in court where they contradict the law. so the question of jurisdiction is crucial here. like countryfree said, haircutting balances with a generalized loss is 100% illegal in the USA, where poloniex is organized. but IANAL and i dunno if they've dodged a bullet by restricting USA customers from this market. if so, what laws apply here? EU? various local laws where lenders reside?

i wouldn't be surprised if the EU offered similar protections to the USA but i have no idea where to start researching the law.

Yes, the case is difficult. What Poloniex has done is illegal in the US, but the exchange says we can do it because we're not offering this service to US citizens. It's a bit like saying drugs are illegal, but there would be nothing wrong selling drugs to a Chinese tourist...

There's also lots of regulation for consumer and investor protection in the EU, but they would not apply to investments outside the EU.

Poloniex is based in Boston, so justice has to be there.

I am curious to know why you believe "haircutting balances with a generalized loss" is illegal in the US. I think this is exactly what happens to depositholders at banks whose deposits exceed FDIC insurance limits when they fail.

I would also point out that I do not know if Poloniex has shareholder equity equal to or greater than the amount of the loan losses. If equity is less than the amount of the loan losses, suing Poloniex may only result in you paying a lot of money in attorney fees, and Poloniex declaring bankruptcy.

What's wrong with that? It would still be better than keeping the business running as usual as it is. At last, the world would be sure this won't happen again.

Does anyone here is a regular poster on Wikipedia, or knows a journalists?
Thanks.

maybe we should push poloniex to increase minimum rates to 20% apr? It's pretty still low for traders. Exchange fee goes up 10 times and some of this increase can be directed to covering our losses.

Roughly $13.5 million USD is lost and we have to count cost for that.
I think now it's time to give a concern at margin trading, need to remove margin trading which have poor liquidity like BTC, CLAM.
Not only poloniex, I want to say it is a lesson for all, All exchange should be concern about margin market otherwise user faith will certainly be lost.

hmm, lending rates are directly linked to demand from margin trading. I don't want another sh*tcoin collapse...

Besides, I've removed most of my coins. I only have about 0.1 BTC left at Poloniex. I just don't trust it anymore, and who can?

Has this scandal had a material effect on P2P lending liquidity, or are lenders generally just eating the loss and continuing on as normal? Where can we view statistics about outstanding P2P loans and interest rates? I'd have thought lenders would withdraw funds en masse and this would naturally drive interest rates up.

There is nothing wrong with this per se, but I would repeat that I do not believe this is a winning case. I would also repeat that I believe the right thing to do is Poloniex to cover the losses, I do not believe they are legally required to do so.

If you did bankrupt Poloniex, I believe you would spend a lot of money out of your own pocket doing so, and any money you do recover would probably not cover any legal expenses you incur.

Both Paul Vigna and Steven Russolillo have covered bitcoin recently:

ETA/removed email addresses

There are some writers at Forbes also, but IMO they lack credibility. I don't know any of these people personally.  

That depends on how Poloniex is set up. If the money of customers' is in custodial accounts, (which i think might be required by law?) then in the case of a bankruptcy, those funds won't/can't be collected, and will be returned to the account holders.

Hmm. It was only socialized between other margin traders right?
Still, scum behaviour.

A 1,800 BTC loss, I've lost myself more than 1 BTC, and I just can't eat it. This is no business as usual. I don't think there are stats available. I guess Poloniex have some, but they're hiding it. We still don't know how many people were affected...


No, I would not have to pay any legal fee. I've found a lawyer who doesn't ask for any money up front. He just want a share of whatever he may get from Poloniex, but it's a huge share, with a substantial fixed minimum.

I visualise Tristan giggling to himself, every morning of every day.....

Both Paul Vigna and Steven Russolillo have covered bitcoin recently:

[/quote]

Thanks a lot, but I suggest you edit your post and remove addresses. I noted them. I would not like to have my address on a public forum.

I don’t know how their accounts are setup. I don’t believe they have bank accounts with customer money. If they do go bankrupt, the argument will likely be made that account holders have a lien against crypto assets in the amount of their various balances. Someone who has a 1 btc deposit will have a lien on 1 btc worth of their bitcoin and someone with a 1 ltc deposit has a lien on 1 ltc worth of litecoin.

I removed their email addresses, however they appear on every article they have written or contributed to.

I guess they don't mind getting an awful lot of spam...

Now, something important!

I guess we all agree here that Poloniex has been doing a bad thing, here, but everybody can act to tell the world about it.

All you need is a smartphone (Android or Iphone). Just download the Poloniex app, and give them the lowest rating with a comment explaining you cannot trust an exchange which socializes loss among its users. Please do it! It's important that the world knows about it, and it's important that Poloniex (and Circle behind it) sees it's under pressure, so that it must give us our money back.

Thanks in advance to anyone who will help spreading the truth.

There's 2k reviews in the app store.

A couple grumpy reviews, especially if they look targeted (which this does.) will change nothing, and perhaps even be removed by google/apple for being fake.

Yeah, i also think they just store their customer's assets in a cold-storage somewhere. I'm kind of interested to know what the rules and regulations on that are, and to who these funds belong in the end.
Really curious actually.

I just know a couple other exchanges who do have custodial bank accounts, but knowing poloniex i wouldn't expect too much from them, much less so in a bankruptcy case, when i can't even under normal circumstances get my money out.

I don't believe poloniex has any customer money in bank accounts because they only trade crypto, and stablecoins.

Gemini for example has customer USD deposits in custodial bank accounts, however the purpose of this is so FDIC insurance gets passed along to customers in case the bank the deposits are being held in fails. My understanding is if an exchange were to hold customer deposits in an account titled in their corporate name, the corporation would have their deposits insured for only the first $250k of deposits, however an exchange holding USD deposits in a custodial account, each customer of the exchange has their USD deposit insured by FDIC insurance limits.

I don't believe the topic has been litigated in the courts, but I believe poloniex owns all coin in their cold/hot wallets and has a liability in the amount of customer deposits. When a customer deposits 1 BTC, both the assets and liabilities of poloniex will increase by the same amount. The important question is if customer deposits amount to an unsecured liability, or if customers have a generalized lien on poloniex's crypto holdings in the amount of their deposits.

Well, if you have a better idea, don't keep it to yourself.

Poloniex was the only exchange allowing huge margin trading on a sh*tcoin like CLAM, so that was a mistake we can talk about on a review. I guess we published 10 negative reviews so far. We need many more!

what percentage have they stolen? When will they return the money?

1,800 BTC have been seized, about 10% have been returned so far, we don't know what's next...

Poloniex has added new services.

It's now possible to buy BTC with a credit card, and you can also buy or sell via your bank account. It sounds good but who can trust a company which doesn't care about its clients, allowing huge margin trading which are doomed to fail, and doesn't hesitate to take money from its loyal customers to pay for its negligence?

I wonder what their game plan is. It's clear the public has little intention of coming back.

I presumed buying Poloniex was something to do with their grand plans to tokenise everything and Poloniex would be the portal to trade them but it seems a vague plan at best. If they ever get around to it no one's going to be there any more.

+ put a gun to your head for your ID, before your tokens will be yours again. Thieves.

Is this for coins that have been left in there for years before it was sold or does it relate to a more recent deposit?

Anyone expecting that to not be the case hasn't been paying attention for a long, long time.

Talking about Tristan/Polo officially stating that the now sold company, will give fair warning if/when new rules come into play. Well, that didnt happen.....

So true! I've lost more than 1BTC, I won't ever forget. And Poloniex can count on me to keep on telling others about what they did (and I'm not alone). they've invested to launch new services, but it would be smarter to pay back what they've taken from their clients.

Bitpoint shows it's a better exchange than Poloniex:

https://cointelegraph.com/news/bitpoint-reveals-amounts-stolen-pledging-to-reimburse-users-in-crypto

After a theft, it says it will reimburse all its customers.
So you'll know which exchange to use, now...

Poloniex 's really sinking.

They're down to the 79th position on https://coinmarketcap.com/rankings/exchanges/

But I'm not surprised. When you steal your customers, nobody wants to do business with you.

Kind of meaningless when there are so many bullshit exchanges out there.

They're only 10 places below Gemini and five below Itbit and they probably believe they're in competition with them rather than one Indonesian 9yr old and his bots.

In other news - https://www.coindesk.com/circle-moves-non-us-poloniex-customers-to-new-bermuda-entity

Thanks for info, I'm not reading coindesk that often, but I can't believe what I'm reading:


So they're moving to Bermuda! Is there a better regulatory framework out there?
I highly doubt it. The only reason to go offshore has always been to escape tax, corporate responsability or consumer protection regulations.

If you think your money isn't safe in Poloniex in America, as I do, it's certainly not going to be any better in Bermuda.

Another interesting topic about Poloniex:

https://bitcointalk.org/index.php?topic=5168204.0

Or just another reason not to use that exchange, and to let it die.

Any update from Poloniex? Have they even said anything since the 10% repayment? Hearing crickets at this point is bad news. It probably means they really were banking on borrowers making deposits to cover the losses. As if that were ever going to happen...

Sadly, no. They've taken no money without showing any guilt, and it seems they have no plan to pay back. So please keep this topic active, and spread the world. If you're looking for a safe place to trade, this should not be Poloniex (or Circle).

I put some BTC into lending there in June but it was way past the 6th. By July everything was moved out, it got some gains, but everything went normal. I didn't knew anything like this was happening, and its quite unprofessional of theirs when its clearly their fault for messing with clam.

If i understand correctly you were taken 16% of your total BTC lending amount and from that only 10% was returned back? And you already gave up and turned to litigation?

I though no American could lend anything there after last December, and i did saw an American account this year distinctly missing the lending tab.


In the meantime, what better alternatives are there for lending bitcoin?

You were lucky, I know some guys that deposited after the balance deduction, and still got robbed.

You can still lend on Bitfinex, Liquid, Celcius, Nexo...

I suggest you give up lending if you're not following the news. You began right after Poloniex stole its customers, at the very moment everybody was leaving, it was a very risky move.

Bitfinex doesn’t allow US customers. I believe you can lend on all the other platforms you mentioned.

If you lend on any platform, you run the risk of the loan not being repaid. Most exchanges will not guarantee repayment and disclose that traders may have insufficient equity to cover the loan plus interest.

neither of them are from the USA so they're fine. unless things have changed recently, you don't need KYC to do margin lending on bitfinex anyway so i'm sure americans are still sneaking by with VPN.

i would say bitfinex is the only lending market with thick enough order books to justify the default risk. lending anywhere else is straight up crazy. just look at what happened at poloniex---and the other markets are even thinner than polo.

Being a victim here, I should not believe in lending any longer, but I still believe it could work if exchanges were better managed. I mean that there should be no margin trading on small sh*tcoins, that in all cases margin trading should be volume-limited, and that there should be circuit breakers, like on the stock market, where all trading can come to a halt in case of excessive volatility.

Frankly, a lot could be done to make trading and lending much safer that now.

Poloniex is rated at TrustPilot. Usually, I don't give much credit to those ratings, but everything there is true.

https://www.trustpilot.com/review/poloniex.com

Please add your rating if you're another victim like me.

Well I too was a victim of this debacle at Poloniex.  Have only been re-imbursed 10% so far and am still scratching my head as to how the fuck a company like Circle is still running Poloniex as shadily as it ran before the Circle acquisition.

Why isn't there is class action lawsuit yet?
https://www.theblockcrypto.com/2019/06/06/poloniex-could-leave-itself-open-to-legal-threats-by-socializing-1800-btc-loss/

Perhaps a tweet storm to the following may stir up something?
https://twitter.com/jerallaire
https://twitter.com/psneville

Thanks for joining this topic.

A class action would be nearly impossible because of Poloniex's terms. Litigation is coming, but it's really expensive. Only those who have lost a lot will do it. For the others like me, the best option remains to damage even more this exchange's reputation.

Campaign on Twitter are being done, see the "Poloniex Lending Theft"  group on Telegram to find out the schedule.

Thanks for your efforts and for making this thread. Like you, my losses are also not enough to warrant spending legal costs, however I would be happy ??? to be part of a group of creditors waiting in line to be paid back my own money. Couldn't find the telegram group - post a link?

Maybe a #hashtag campaign will stir up some action - #poloniextheft #poloniexcrooks #poloniexscam (my suggestions).

You can share my tweet too across any relevant groups: https://twitter.com/KryptoRevivaL/status/1160769662533029888

The link is on this topic already, don't have the time to look as there's an update.

Or kind of. It's more of a joke.

I've just received an email from Poloniex, and it says that all impacted lenders (that's people like me who were robbed of their savings) will be credited their Poloniex trading fees until their losses are fully recovered.

Free trading!

Well, since the incident, I've stopped all trading and lending at Poloniex and I guess many others did the same thing. I'm not about to go back, and frankly this offer is absolutely ridiculous. I've lost more than one BTC, and trading fee is 0.25% at Poloniex. I would have to trade for years to be credited the same amount Poloniex has stolen from my account.

Sorry guys, but this is no solution.

Their latest email update is a joke indeed.   Credit us back with our own trading fees?!  What a fucking farse! Why not PAY US BACK WITH THE MILLIONS YOU MAKE IN TRADING FEES YOU CROOKS?

The more I think of it, the more I find it ridiculous.

Because they must have thought about it. Made their own calculations, and they should have seen that the money they stole was not business as usual to theirs victims who have all withdrawn all their coins from this damned exchange.

They made an announce, but I'm sure they know it would not cost them a dime, as nobody wants to trade with them any longer.

They shall pay back, then we'll talk.

Sad news: the media are against us!

I created a new topic about this subject:

https://bitcointalk.org/index.php?topic=5175519.0

Both Coindesk and Cointelegraph are giving fake news about Poloniex paying back what it stole. It's simply not true.

Poloniex's still alive, so is this topic!
But I promise to close this topic is Poloniex is giving back everything it owes us.

Did you mean that you will close this topic if they are giving back that they owe its users, may be they started the procedure to return the customer funds and with time they might complete the procedure, did you contact their customer service, i know they have a shitty customer care and it will take a longer time to get any response from them but you can wait for their response, i stopped visiting them a long time back as there are other options to trade without issue.

I think you shouldn't close it because the doer did the deed and it needs to be buried somewhere in the ground for anyone who tries to find it any time later in future. I also had some issues with poloniex, I deposited BTC0.5 over there. Till then, they allowed me small withdrawals ranging between BTC0.01-0.05 but there came their stupid rule of 'Get your KYC done before you can withdraw more than BTC0.02xx'

It was extremely shocking because I was about to sell my BTC and trusted them that I'll be able to get my BTC whenever I'll need and that tragedy happened. It took me 2 weeks before they carried out my KYC and allowed me to withdraw my coins.

Of course I did, but creating this topic with dozens of people commenting it may have been more useful.

I don't think of it as helpful until they respond.
busoni (https://bitcointalk.org/index.php?action=profile;u=139578) (Owner of Poloniex) seems to be the only guy from Poloniex who was available here till Feb 2018, so I can't ask you to contact him for any response here and if nobody from other party can respond you, how can you expect forum to play any role except give them red trust. You can stop a few people from using their exchange but not all.

He is no longer the owner of Poloniex and hasn’t been for quite some time now. Circle purchased Poloniex early last year (https://blog.circle.com/2018/02/26/circle-acquires-poloniex/).

Yes, and the man's living the good life, now.

Somehow, I think the lending loss wouldn't have happened if Busoni would have been in charge. I guess he wouldn't have allowed huge margin trading on such a small altcoin. The man had a better understanding of cryptos than Circle...

This seem to be an issue with Poloniex and with new ownership. This doesn't affect the Bitfinex lending as they are independent platform.
Poloniex did have a large make over with the change of ownership but they still failed to gain attentions form the large traders on a competitive market with low fees and better supports. There are many ways of exchanging coins and people with much of hacking news everyday are moving towards dex and P2P exchanges.

I don't know if there would have been losses if he was still in charge. There was margin trading going back years when he was running Poloniex. Poloniex has long has a very small market share of overall trading volumes, so having a large amount of margin loans outstanding for one coin is usually not a huge deal because of large trading volumes on other exchanges, and the ability of the market as a whole to absorb liquidations. What happened with clams is that no other reputable exchange is trading clams, so poloniex had a nearly 100% market share of volumes, which means they actually needed to monitor outstanding margin loans as a factor of trading volumes and orderbook liquidity.

I don't know when margin trading started on Poloniex, but if it was before ownership was sold to Circle, and there were not risk monitoring systems in place that were sounding off alarm bells well before the amount of margin loans for clams were outstanding, I would suspect he didn't have anything in place to stop the platform from allowing additional margin loans on these types of coin.

An article about the Poloniex incident was just posted by a user at our web site: https://creditstocks.com/poloniex-scam-alert/ (https://creditstocks.com/poloniex-scam-alert/)
Spread the word, if you agree.

There's some unsolved problem margin trading in poloniex even since 2017 , so i think it's been exist when busoni in charge , wouldn't make any difference now.

I personally left poloniex in 2018 after they ignored all my emails regarding the deposit and withdrawal problem , takes too much time to respond on it causing me in quite huge loss due that time I was doing arbitrage trade. You know how it feels ... sucks. Although I respect how they didn't faking their trading volume,  I hate how they threat customer in such way. Shame on poloniex with this socializing 1,800 btc loss.

Thanks a lot for your support.
I appreciate it.

To get the latest news about the issue, check the "Poloniex Lending Theft" group on Telegram.

Poloniex sent me (and to all other victims) the following email:


They haven't forgotten, neither do I!
But their answer is quite insulting.

I've received a credit of less than 0.00001... BTC

This is ridiculous when I've lost more than 1 BTC...

Bit surprised to see the "Lend" link appears next to my CLAM balance on Poloniex. It also appears for BTS, FCT and MAID.

https://medium.com/circle-trader/overview-of-btc-margin-lending-pool-losses-a2f0905aaa56

"To protect lenders, we are removing margin trading for 4 assets: BTS, CLAM, FCT, and MAID. In order for margin liquidations to process in an orderly manner, the market must have sufficient liquidity, and these tokens currently lack that liquidity. We will continue to monitor them and may reinstate margin trading for them in the future. We have communicated directly with all margin lenders in these markets."

Does anyone know when margin trading was reinstated for those four cryptocurrencies? Is there anything official about this?

Add insult to injury, why don't you? ::)


Have you actually tried to lend them or take margin positions in those markets? I wouldn't be surprised if they aren't functioning. Poloniex is known for weird glitches and a sloppy front end.

I'm not game to actually try to use their lending system, but I don't recall seeing the Lend link next to my CLAM balance since the "incident". My memory may have failed, though.

If they are indeed lending CLAM again it could be potentially risky, since CLAM has been in maintenance for around a month... no deposits or withdrawals. It's essentially a virtual token at the moment.

So Poloniex could be even worse that I thought!
I sure don't want to test it, but if they have reinstated CLAM lending, they're mad. I wish I had discovered their madness before June...

120 days passed from the day Poloniex stole 1800 BTC from it's customers to cover it's losses incurred in CLAM price crashes caused directly by it's incompetence and poor management. They announced that they are "committed to making lenders whole, come hell or high water" but I received only one 10% repayment 112 days ago and not a single satoshi after that. Beware of Poloniex!

4 months!
It was the 6th of June that Poloniex stole 1800 BTC them its customers.
This exchange still owes them more than 89% of that sum.
I will update this topic at least once a month to tell the world about it.

At least, the message is clear to all holders and investors, stay away from Poloniex.

I cant still believe that there still people who do believe out into this exchange?
Following up https://medium.com/circle-trader and https://twitter.com/poloniex if ever they would post out some updates.
I would keep an eye to this thread to see on what you've got.

Thanks for your support.

Circle announced that Poloniex is spinning out into a new company based in Asia (and backed by a new set of investors[?]). They announced there will be in excess of $100 million in investments in the new company’s platform. I am not sure how they would spend that much money improving the platform, but I would now find it unlikely that lenders will receive additional compensation.

I'm not sure how either, especially since they are pulling completely out of the United States -- no licensing or FinCEN compliance required.

It would only take 12-13% of that $100 million to make lenders whole, but I agree it's unlikely given the circumstances. Circle is obviously washing its hands of the situation, and it sounds like they're dumping Poloniex for cheap.

I'm still trying to figure out why some people are still using Poloinex exchange,  to me it's an outdated exchange,  they did not make room for improvement,  lots of complain from customers about the exchange, they've got no new good  coin being listed. Still yet some people are still investing their hard earned money on this exchange

We still aren't sure of what's happening. There are many questions.

1/ Has Circle totally dumped Poloniex, or does remain a shareholder in the new company?
2/ Those mysterious Asian investors, do they actually control the new company?
3/ 100 million $ new investments! Really? What for?

... To be continued...

The details are scant so far, but I interpret "full backing" to mean that Circle is dumping Poloniex entirely. Jeremy Allaire will be out of the picture for good:

In this saturated exchange market, this acquisition only makes sense if Circle is selling at bargain basement prices. I don't know what the hell they're planning to spend $100 million on, especially if they're pulling out of the US market. That number might be exaggerated. This is all future tense anyway; the deal isn't even done yet.

The announcement uses the term "spinoff" which implies Poloniex will be an independent company.

The $100 million figure sounds suspiciously high, and I would not be surprised if this included the cost of buying the platform and/or capital to facilitate OTC trades.

Yes, independent company but the original shareholders may still have a part of it.

$100 million to buy the platform is very possible. So Circle, which bought Poloniex $400 million would have lost $300 million. Ouch!

I guess that if Poloniex really does have new owners, they will make themselves known soon. If there are no news, it will mean the same people will remain in control.

Legally, I believe this to be a distinction without a difference.

I also believe the deal hasn’t closed yet and probably won’t close for a couple of months. US customers are still able to trade on the platform and Circle has said they will maintain possession of US customers personal information. I would say the deal has probably not closed as long as US customers can still trade.

One thing which surprises me is that Circle would be giving up on all non-US customers. That's a lot of folks!

Circle would remain an American company serving American people, but the people behind Circle could remain shareholders of a new company serving customers from the rest of the world.

I've received a new email earlier today:

Reminder: Poloniex to Spin Out of Circle


So they're incredibly excited, but I'm not!
The one and only thing which would make me cheer up would be that the new Polo Digital Assets would pay back what Poloniex stole from me and thousands of other innocent people.

Note also that they're still hiding the name of the major Asian investment group which came to their rescue. If everything was neat and clear, there would be no reason to hide their name...

I still recommend to stay away from Poloniex, or Polo Digital Assets.

so many reports that Poloniex is a scam, i will say to withdraw all your coins and storage safe in your wallet instead of leaving them on a exchange that is not regulated anymore by the USA regulators. I have read many reports that Poloniex has been systematically locking accounts and that users after log in can see only a white screen, i had an account with them and i left some satoshi and they want me to send them my passport and other information to be able to withdraw but after the KYC leak of Binance i don't trust exchanges anymore.

Here some reviews of Poloniex on trustpilot, some are really bad *Stay Away*

https://www.trustpilot.com/review/poloniex.com (https://www.trustpilot.com/review/poloniex.com)

Maybe there's still some hope after all.

Yesterday, I've received a payment from Poloniex of 0.0047 BTC. Considering I've lost more than one BTC, that's nothing, but it's still a positive sign.
Other people going through the same fate have also received 0.0047 BTC.

I'm not sure what they're trying to do...

It looks like they are expanding the revenue streams they are using to repay lenders who lost coin.

a small, flat payment obviously sucks for larger lenders. it might please lots of smaller lenders though. i think that's the goal. now they can say they fully repaid thousands of affected customers:



they are just reimbursing lending and trading fees, so if you don't actively use poloniex you get nothing back. tbh, it doesn't sound too promising.

Yes, I've received their email but since I'm missing more than one BTC, getting 0.0047 is meaningless to me. Except that it show they haven't forgotten. Good, I haven't forgotten either, and I know that free trading is also meaningless to me. Even if I were trading everyday for 10 years, that would not repay me. Fees are just small...

I suppose most of these people doing this illegal crap don't actually think that the people they're stealing money from are ever going to pursue them in a legal battle, and that's where they're wrong because they could get away by taking lots of people's money but one day they'll come across one person that won't put up with this.

I'm glad you guys have been posting on here, letting everyone here know what type of shady business these guys are running, and that you should never trust a 'business man' so to speak. Anyway, I hope the court rules it all in your favours and Poloneix gets to make it right!

Yes, we're waiting...

In the meantime, we shall keep on talking about it. They did the wrong thing, they may do it again.

Got an email from Poloniex this week:


Unfortunately, there's nothing new.
They just say that I can use their service for free, all my fees will be reimbursed.
That's clearly not enough. All the people who had their money stolen have moved their funds, and they don't want to use this service ever again, until we're getting our money back...

Poloniex still owns approximately 1800btc-180btc=1620btc

This is about 14million euros with current prices and it used to be even less than 7mil

Imagine another exchange that can not payback that amount but still exists.

News? Did you get the money back?

No, I didn't!
Nobody got his money back. Poloniex's a real gang of thieves. Stay away from that exchange.

"New owner" Circle looks polite, i don't know why they don't give your money back
Good luck!

Don't trust his smile. ;)

Justin Sun bought Poloniex dirt cheap as a pump machine for Tron. As soon as it was acquired, they listed TRX. Then they released wrapped BTC on Tron. Then they acquired Tron's biggest non-custodial exchange. Then they de-listed Tron competitors. Then they launched a Tron-only IEO platform. Probably other stuff too.

He's hiding Polo in the Seychelles and still playing by the rules of the wild west. You think he has any interest in paying off Circle's old debts? I don't.....

Did you have any luck after contacting some lawyers that you mentioned having contacted last year? I take it that you didn't by the tone of your post but I'm still curious.

I hope that you understand that neither the new or old owner actually has your money. The coin was lost because of loan losses.

I would not be surprised if the transaction was structured in a way such that the new owner is insulted from any claims from the margin losses, regardless of what they have promised to do for those who lost coin.

You might have me confused with the OP. I didn't lose anything in this affair. I've just been keeping tabs on Poloniex.

I remember the OP saying he spoke with an attorney who felt he had a case, but without a larger class action type suit the amount in question wasn't worth the legal costs.


Legally that's not possible, in regards to the victims' civil claims. The new owners have the same legal exposure the original company did. It's possible that as a term of the acquisition the new owners stipulated that the original owners pay any related settlement or legal costs, but that would be very unorthodox.

I think it would be more reasonable to assume they bought Poloniex dirt cheap with the stipulation that Circle be protected from any legal claims. Circle wanted to wash their hands of Poloniex entirely.

I can't believe any deal or liability with Justin Goddamn Sun monitoring from a nearby wardrobe is going to be legit in any way. I'd love to know whether this particular shitshow came up in negotiations and was discussed at length or whether both parties just shrugged and moved on.

I believe Circle took it extremely seriously. I feel they viewed it as a real liability, and that it was one of the reasons they wanted to be rid of Poloniex, at a dirt cheap price if needed.

Justin Sun on the other hand is probably hiding his interest in Poloniex through a maze of shell companies in different countries. With Poloniex registered in the Seychelles and no real fiat markets (no custodial bank accounts tied to the exchange) I'm sure he feels very insulated from any legal recovery effort. What was a big fat liability to Circle was a write-off to him.

Shame Circle didn't take the actual running of the exchange seriously at any point. I'm long past using it but I did pay attention to their tenure and amazingly absolutely nothing had changed, and then they dropped this on their users.

If I were a VC type my taps would be turned off if they came a begging. They didn't have much cred before, then they buried it completely.

You're right, I confused you two. I found a telegram link, and I saw similar things being said, ie. complicated/expensive. Apparently figuring out which jurisdiction applies is (still) a problem...

Actually, nobody's totally sure of what happened.

We know what Poloniex said, but a guy I exchanged with on Telegram said he has proof it was a theft.
We shall remember that it took Poloniex 10 full days to react, and explain what happened. Why did it take so long?

Poloniex at first said it was fully commited to reimburse anyone, and then nothing for over a year.

The only thing for sure is that you shall stay away from that exchange. Even more so with the new owner.

I assume they were in damage control mode, figuring out their legal options and obligations, deciding whether and how to socialize the losses, etc.

Did you ever see this supposed proof? I would take it with a grain of salt if not. I don't believe there was a corresponding hot wallet withdrawal at the time, or any other signs that it was related to a hack.


That's Circle for you. They've been all over the place for years. I think they had high hopes for Poloniex, then saw that volume completely died after the 2017 bubble popped, and eventually decided they wanted nothing to do with the altcoin exchange business. I think this margin lending disaster was just another thing pushing them to get out.

I know the whole story very well, I was a Poloniex user for many years, long before Circle bought it. Actually, I'm sure nothing would have happened if the smart guy who had created Poloniex was still in command, but we can't change the past, and considering Poloniex's new owner doesn't want to correct what's wrong, the only advice is to stay away from that exchange.

Poloniex does not only socialize losses but also actively enriches itself on the expense of its customers:
https://medium.com/@HjalmarPeters/how-poloniex-enriches-itself-by-screwing-its-customers-2002b61dced0 (https://medium.com/@HjalmarPeters/how-poloniex-enriches-itself-by-screwing-its-customers-2002b61dced0)