Crypto at the Crossroads – Poloniex Epic Fail (Opinion Editorial)
As most cryptocurrency traders know, Poloniex is the largest alt – cryptocurrency exchange and the unrivaled leader in the industry. They developed the industry standards for cryptocurrency exchange and trading. Most of us love Poloniex but...
Over the last month and a half or so, Poloniex and its traders have become victims and losers of manipulated markets and DDoS attacks. With these attacks, Poloniex has endured great strain to their customer support as they were found unprepared for the large swath of requests for support during this period.
Those of us that remember when online stock trading was first introduced, this was also a problem with massive wait times for support and how to prevent it from happening again. The online stock exchange trading has addressed and fixed these issues whereas Poloniex has not thus restoring trust and loyalty to the industry. This situation is why we find crypto at the crossroads with the Poloniex epic fail.
April 4 would be the precursor to what we would see in the first two weeks of May as the rise of Ripple (XRP) emerged. No one thought that that severe DDOs attack of April 4 would become the norm for Poloniex with the constant and well-timed barrage of these attacks in May. Logical reasoning would lead to the belief that the attackers are cryptocurrency traders which have found an exploit (not so much in the software) with a way to drive the coin index prices to a point whether it be high or low then to be followed up by an DDoS attack to disable trading at Poloniex. These combined actions generate ridiculous and huge profits for them. It is saddening that there is this much greed to hurt others but here we are. I wish these whales would lighten for the general good of the markets.
During these DDoS attacks, the Poloniex website becomes frozen and nonresponsive causing traders to be unable to buy or sell while the whales let their APIs run the price down of coins. Other actions that result from these attacks are margin calls and stop losses to not be triggered. Many traders have suffered significant losses due to these lockout times and non-functionality.
The relative ease of purchasing Bitcoin has brought an influx of unseasoned number of investors and traders at Poloniex. It is evident that a significant number of these new traders do not research the coins and their planned perspective functions. They merely follow the Trollbox advice which further compounds the losses when they are unable to cancel buy and sell orders. The whales just love this and exploit this lack of knowledge for their benefit.
No one knows the internals of Poloniex, as they have been quite silent during this unexpected dilemma where they were blindsided and continue to be so. They have put out a press release with a statement that some have stated is questionable at best. The persistent lag of the website is going on two weeks that plagues traders with no obvious recourse to rectify the situation. Trading continues during these attacks when it should be halted. Margin positions are still closed during these times.
The support continues to be severely backlogged with the appearance of selective support as indicated by the numbers of the tickets shouted out in the Trollbox by traders to the moderators for help. The ticket numbers are over a 20,000 range and many have been waiting 10 to 14 days for resolution.
How will Poloniex recover from this mess and maintain its leadership status? Will another exchange rise up and take its place? There appears to be a mass exodus by larger traders and investors seeking stable exchanges as noted on Poloniex Twitter feeds. With massive losses claimed by traders, one of the worst fears has entered the industry, a legal dispute and attorneys to recover these losses. There is some that claim that Poloniex is involved with insider trading which we all hope is not the case. Truly dark times for the altcoins.
Poloniex needs to find its identity. This might mean a revamping of the interface and at a minimum halt trading during these DDoS attacks. Perhaps eliminate margin trading (this writer believes this is what attracts the attackers) until a solution is found and/or run another website side-by-side. Whatever it takes, something needs to be done and soon. Cryptocurrencies were never meant to be regulated and centralized but there are cries for some type of body to oversee it to maintain credibility for cryptocurrencies in its infancy. No one wants any government to be involved and disruptive as much as possible.
Cryptocurrencies have made the speed of money nearly instantaneous and these high-speed financial transactions require high-speed support or it is worthless. Crypto won’t wait and its reputation cannot be tarnished at this early stage in the game. It is imperative that we show the masses that we can manage ourselves without intervention. We cannot afford anything to distort what we know to be really special and innovative, our beloved Bitcoin and its children the altcoins.