Poloniex lag, an ethical and highly risky problem

[zippidy]

Don't use Poloniex's Margin trading platform unless you understand that you could lose all of your money in one server glitch that apparently happens all the time


I'm not an expert trader, and I don't trade in heavy volume, but I do know one thing: when I click a button on an exchange website to close a margin position, it should work.

Basic stuff, right?

Kinda like when you go to the store and buy some groceries, you expect to leave the store with the groceries you just bought, right?

Well, this morning, Poloniex had some of the heaviest Ethereum trading during a massive pump to $50. It was exciting, it was fruitful and it was intense. Naturally there was a little lag from time to time, as with any exchange on high volume days. It's to be expected and has never been a cause of concern for me on any exchange. (To be honest, I never even thought it was Poloniex when I noticed a lag, I figured it was my browser due to all the AJAX requests happening at once). But today I noticed folks in the Troll Box complaining about "transaction failure", "lag" and straight up "can't trade", and this was in the middle of my long position on ETH, which made me a little nervous.

So when I was ready to close my position when the price started to drop, the "close" button didn't do its usual crypto fairy job of sending my winnings to my wallet and instead quickly turned my morning from "crypto fiesta!" to "I WILL FUCKING END YOU" as I watched my ETH earnings disappear... along with half the money in my trading account.

I clicked "close" again and again, I tried asking in the chat box (which was intermittently frozen), I even thought about letting the margin ride in the hopes of ETH turning around while I rebooted my computer and searched for another way to close the trade. Unfortunately, my long exposure became so great that the Poloniex system issued a big red warning box to tell me that they would force liquidation of my account to cover the loss. Once this message appeared, the "close" button on the margin panel suddenly worked again (isn't that odd).

Now I'm not going to accuse them of scamming me for the simple reason that I have no evidence that they have done so. My qualm is about the fact that it was their server that caused my monetary loss. The chat box had blown up with complaints of not being able to place and close margins right around the time this happened to me, so that pretty much ruled out anything on my end.

Thousands of dollars have been lost today by people who were trying to make honest trades. I even read someone saying, "this is ruining my life!"

Think about that... Poloniex's server issues (issues that a multi million dollar company shouldn't have) ruined someone's life today. Maybe even a few people's lives...

So I wrote to them about the problem and when they finally responded to my support request about the issue they said

"I apologize for any inconvenience caused and we really appreciate your patience and understanding. It is however not our policy to provide any compensation in relation to server issues."

That was horribly concerning to me.

Basically what he's saying is that, as a crypto trader on Poloniex, you need to accept that you could lose all the money in your account due to a glitch in their system, and because it's their policy not to compensate you, you are up shit's creek.

Does that sound ethical to anyone?

If I paid you to allow me to use your bike for the afternoon, and as I was riding I noticed the breaks didn't work, whose fault would that be?

I'm interested in how often this happens on other exchanges and why Poloniex can get away with this. The only other time I've had a similar issue of major lag that was affecting my trading was with a binary options broker whose call and put buttons weren't 100% responsive (things like placing my trade too far after the time I placed it and not at the price I wanted it, missing opportunities, etc.)  It got to the point that I didn't trust them anymore and stopped using them.

That's where I'm headed with Poloniex.

It wasn't a huge loss in the grand scheme of things. I actually really enjoy trading there, but this may be it for me, seeing that

 - I'm not the only one who basically got cheated out of a large sum of money

 - That there's no way to get that money back

 - That the people who facilitated that theft take responsibility for the server problem but refuse to compensate me
   (not even my trading fees? C'mon...)

 - That my amount was only enough for small claims court, but that it could have been much more on any given day

All of this is really begging the question of how Poloniex isn't being sued right now, for negligence at the very least. I mean, aren't they responsible for computer glitches that result in the loss of funds??

Extremely disappointed..

[calkob]

That sort of trading is seriously high risk on any trading platform.  i have even used ones that tell you so in the small print, if you were to get cleaned out there is absolutely no come back on it either. trade with caution.

[zippidy]

That sort of trading is seriously high risk on any trading platform.  i have even used ones that tell you so in the small print, if you were to get cleaned out there is absolutely no come back on it either. trade with caution.

Margin trading comes with the risk of being wrong about the trade. That isn't what I'm talking about.


This is a problem with their servers not being able to handle the client load and causing massive monetary losses for traders trying to close their margin positions.  

 i.e. broken trading platform = "accidental" loss of funds


My question is:  who is at fault? From my standpoint, if the trader is paying fees to use the servers to handle large sums of money, then it's not weird to expect those servers to function properly.

[BitBoost]

The only issue with whichever exchange using margin trading is the MARGIN CALL, if you don't have many resources and you go against the market, you lose all the money...

[BrewMaster]

whenever there is a pump going on, specially multiple pumps of multiple big coins with lots of volume, that attracts lots of traders and lots of orders are being executed each second. that means a very heavy load on the server for each request either directly through the site or through their API. and that is why they lag and go down so often.

but also there is always a possibility that they "put the lag there" to prevent some orders going through. possibly some manipulation. although i can not prove it.

but i have seen they fake disabled markets such as ethereum before to prevent its crash. and continue manipulating the price and kept it up. so i wouldn't be surprised if i found out they do way more than that behind the scenes.

[eternalgloom]

What's in other large exchange websites' TOS about failing a trade when it's due to a glitch in their software?
Do they offer some form of compensation if that ever happens?

I'm personally not sure where I stand on this, since it's never happened to me.

[Henkkaa]

I definetly agree, that this is not acceptable by any means. I was trading Ethereum today, as it was going up, and I missed some really good opportunities to sell, because polo was crashing all the time. If this was something like YoBit (they never get even a 100th of the volume seen in polo today), but this is afterall Poloniex, the largest cryptocurrency exchange. They make over a million dollars a day in commission, so it's kind of frustrating that their servers have these kind of issues. It also affects the market, as people panic sell when their exchange is giving up on them and crashing when they hold a lot of alt.

Nonetheless I will still keep using poloniex, since it has the most volume and is the best exchange overall. But seriously though, get your shit together Poloniex!

[zippidy]

The only issue with whichever exchange using margin trading is the MARGIN CALL, if you don't have many resources and you go against the market, you lose all the money...

You apparently didn't read a thing in my post. Or even the title. Maybe you shouldn't respond to threads you haven't read.

[JeffBrad12]

That sort of trading is seriously high risk on any trading platform.  i have even used ones that tell you so in the small print, if you were to get cleaned out there is absolutely no come back on it either. trade with caution.

i.e. broken trading platform = "accidental" loss of funds
My question is:  who is at fault? From my standpoint, if the trader is paying fees to use the servers to handle large sums of money, then it's not weird to expect those servers to function properly.

My friends are losing a lot of his money caused by this glitch. But i think the polo team must improving his server, I will say the team is on the fault. With hundreds btc from the fees and they can use the better server.

[zippidy]

My friends are losing a lot of his money caused by this glitch. But i think the polo team must improving his server, I will say the team is on the fault. With hundreds btc from the fees and they can use the better server.

That's terrible, sorry to hear. I'm lucky that I decided not to do any margin trading with a lot of money. I spoke to someone who lost thousands the same time I did. I asked him why he still uses the platform and he said it's the cost of doing business. With unexpected losses like that, I really hope he is still making a profit overall...

[xypos]

This is a huge problem although poloniex probably won't care.

They are earning a ton of profits from people trading on their platform and paying that around 0.2% fee per trade conducted. They couldn't care less about small players in the system that contribute next to nothing to their profits.

Also by using their site i'm pretty sure in the ToS they state that they are not liable for any losses and the software is provided "as is".

Anyways, if you don't want to trade on their site because of this, then don't. There are alternatives for that. Like Bittrex.

[Iranus]

This is a huge problem although poloniex probably won't care.

They are earning a ton of profits from people trading on their platform and paying that around 0.2% fee per trade conducted. They couldn't care less about small players in the system that contribute next to nothing to their profits.

Also by using their site i'm pretty sure in the ToS they state that they are not liable for any losses and the software is provided "as is".

Anyways, if you don't want to trade on their site because of this, then don't. There are alternatives for that. Like Bittrex.

To be fair, I'm pretty sure that all exchanges are going to avoid being liable for any losses.  However, that doesn't make it acceptable for them to be responsible for these.  They are a very major exchange and if they're taking fees of ~0.2% they should definitely be able to handle their servers and keep the exchange operational.  If we find that the problems are purely because of their profiteering, it'll be time to move to another exchange that takes their responsibilities more seriously.

[zippidy]

They are earning a ton of profits from people trading on their platform and paying that around 0.2% fee per trade conducted. They couldn't care less about small players in the system that contribute next to nothing to their profits.

Yup. Actually, I did the math using their API. For their USDT_BTC pair alone they make over $26k per day, which is over $9 million a year. Add in all those other markets and yeah, I think they can afford to fix their server problems, they just don't care because it's the HFT whales who make them the most money anyway, and I'm sure they all have their servers colocated next to polo's servers, so lag isn't an issue for them.

[yogg]

Yup. Actually, I did the math using their API. For their USDT_BTC pair alone they make over $26k per day, which is over $9 million a year. Add in all those other markets and yeah, I think they can afford to fix their server problems, they just don't care because it's the HFT whales who make them the most money anyway, and I'm sure they all have their servers colocated next to polo's servers, so lag isn't an issue for them.

You are right. HFT whales located next to Poloniex' servers will have less delay in sending orders and executing trades than someone located in China.
On the other hand, if Polo is trying to mitigate a DDoS attack, being close to their servers doesn't change anything.

One sure think is that they should be able to take the load on. They earn enough money to have a top notch infrastructure resilient to DDoS.
However lately there have been a lot of very intense DDoS attacks tho ... Remember that attack on Dyn Dns which made websites like apple.com, spotify or netflix unavailable ?
Well ... if these companies also have troubles with such attacks, how can Poloniex prevent them ?
Check this : Someone is learning to break the internet

What Polo does is not right.
I think they should turn off margin trading during DDoS attacks but they won't make the money from it.

[zippidy]

Well ... if these companies also have troubles with such attacks, how can Poloniex prevent them ?
Check this : Someone is learning to break the internet

What Polo does is not right.
I think they should turn off margin trading during DDoS attacks but they won't make the money from it.

Scary stuff.

And yes, that makes sense as a way to prevent (or at least minimize) loss of funds. If the server is having issues, things like new margin orders, new signups, and maybe even customers with no open orders and no holdings of any cryptocurrencies outside of Tether should be refused until the problem ceases.