Following accusations of trade manipulation, one of the world’s top digital currency trading platforms has come out to share the main issues behind its recent situation of lagging and delays in which several of its users claimed made them lose money.
On Sunday, May 14, Poloniex notes that they have been under continuous DDoS attack which inevitably affects other areas of their operations.
But the law firm Berns Weiss LLP stepped up to look into the claims of the attacks on behalf of the users of crypto exchanges Kraken and Poloniex who may have lost some money reportedly as a result of manipulation and insider trading. The firm will seek to confirm users’ doubts that they were manipulated as well as determine whether the exchanges or individuals associated with the exchanges broke the law in any way.
Too much to handle
However, Poloniex has responded in a statement as to what its users need to understand about the recent situation:
“We have never seen such enthusiasm for trading Blockchain tokens as we have in the past few months,” it says. “Since January, we’ve seen an increase of more than 600 percent active traders online and regularly process 640 percent more transactions than we did merely four months ago.”
Based on the unprecedented level of excitement, the platform adds that their users, especially new entrants, need to put some factors about trading blockchain tokens into consideration. First is the fact that exchanges generally face operational threats that can disrupt the users’ experience.
“These intrusions come in the form of distributed denial of service (DDoS) attacks that target exchange servers with varying levels of sophistication, attempted laundering of funds or funding of terrorist activity, attempted theft of user funds, and other cybersecurity threats that get more creative with every iteration”, says the company. “Moreover, malicious threats to an online global exchange, like Poloniex, can occur at any time of the day, on any day of the year, and from anywhere on the planet. In the case of Poloniex, these threats are present every day, often with multiple, unrelenting DDoS attacks directed at several endpoints simultaneously.”
What is it with new traders?
As a way to say the situation would likely continue, the platform notes that its resources could be strained as it strives to operate on a 24/7 basis. Why? This is because the surge in mainstream awareness about blockchain networks and tokens is drawing new traders into the ecosystem and the exchange has no control over it.
But it could upgrade its system to accommodate new users. It brings about the next operational challenge it cites: human resources management to match the rapid growth of the community.
While these are playing out, Poloniex warns of the high level of risk that trading on an exchange entails especially on margin due to price volatility, illiquidity risk, market manipulation, regulator activity, and others. They make up “the unique and unpredictable mosaic of factors affecting the value of any given blockchain token”, it says.