Jilted Trader is Organizing a Class-Action Suit Against Poloniex

Alleging “possible insider trading” and putting the onus on Poloniex for site unavailability, an apparently former trader on the site has decided to sue the Delaware-based exchange if he can get enough victims together. The apparent downward momentum combined with numerous sustained technical problems at Poloniex led to a number of long margin Ethereum traders having their positions destroyed. The owner of the site, whose ownership information is protected by WhoisGuard, claims to have lost around $250,000 due to the madness.
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The market appears to have corrected itself at this point, with Ethereum valued at just under $90 across the board, but this does not do much for the people who’ve lost their positions due to freak trading incidents. The allegation of insider trading is not so far-fetched when one considers the additional, overnight surge in the Bitcoin value. The unavailability of the website and therefore inability to cancel orders made for an unfair playing ground. It seems likely that a firm will decide to take the case on.

Across the country, Kraken exchange experienced similar problems. They gave a bit more information to one of our readers regarding the slaughter:

A large, legitimate ETH sell order triggered a cascade of liquidations. The downward momentum of the liquidations was slowed by Kraken’s market price protection system. The trading engine and risk systems functioned as expected.

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This is good to hear, one supposes, but what of the unavailability of the website?

The major part of this story that demands attention is the denial of service attacks that both exchanges claim were to blame for user unavailability. At the bottom of the trading dip, as one reader points out, very suspicious orders were being placed:

Are these normal trades? Going down up down up 30-80 30-80 30-80 dollars and so on?

The answer is, of course, no. These trades were clearly triggered by trading bots, which continue to create problems for cryptocurrency exchanges. Bots were in part to blame for the first huge Bitcoin bubble at Mt. Gox, after all, and the technology was also blamed for the ponzi-like unavailability of funds.

Yet, perhaps correction was simply in order for Ethereum. The sharp rise in the value of Bitcoin makes it ever-more attractive to drop the potentially overvalued Ether tokens in favor of Bitcoins, which could be heading to the moon and beyond.

A cautionary tale is here as well, though. Should Poloniex and Kraken allow bot trading at all when bots are capable of creating such havoc in the market? Were some new millionaires minted in the past couple days, folks who shorted ETH long-shot low? Are their gains ill-begotten? Was one or more of them involved with the disruption in access to two of the big Ethereum exchanges? These are the questions we will have to answer in the coming hours and days, as the story unfolds and more details emerge.

However, if you feel you got shafted in the melee, and that this was not simply a natural function of the market – a bear attack, if you will – then you at least have the option of joining others who feel the same by visiting poloniexlawsuit.com.

Source: https://www.cryptocoinsnews.com/jilted-trader-organizing-class-action-suit-poloniex/