Law firm Berns Weiss LLP has begun scrutinizing Bitcoin exchanges involved in recent DDoS attacks. It will investigate claims on behalf of the users of crypto exchanges Kraken and Poloniex who may have suffered losses as a result of manipulation and insider trading.
Although it is too early to jump to conclusions, many account holders on major exchanges had their positions liquidated as a result of the attacks and could not do anything about it. The need for more transparent markets is becoming evident.
Manipulation?
San Francisco-based cryptocurrency exchange Kraken and Delaware-based exchange Poloniex both experienced severe distributed denial of service (DDoS) attacks on May 7-8 that led to many leveraged positions being liquidated.
A large Ethereum sell order was executed within minutes of a DDoS attack on Poloniex. That was a sell order of enough volume to push down the Ethereum price and therefore liquidate positions that had been placed on margin calls.
During the attacks, both exchanges were not functioning properly and many users could not log on to manage their account and control their positions. The exchanges, in turn, may have to liquidate users’ positions based on the margin calls.
Many users of the exchanges are under the impression that they are victims of market manipulation and possibly even insider trading. Berns Weiss LLP states that if the exchanges or individuals associated with the exchanges, such as employees, broke the law, the owners of accounts affected as a result of the violation could bring forward a lawsuit to recover lost capital.
Jeffrey Berns, the managing partner of the firm, says:
“The virtual currency/blockchain practice of Berns Weiss LLP has been contacted by various people inquiring about potential legal action against Poloniex and Kraken with regard to the recent sell off at those exchanges in conjunction with DDoS attacks.”
Kraken and Poloniex account holders who have been affected or have information regarding the case were asked to contact the firm at [email protected].
Law firms protect exchange users
Berns Weiss is one of the firms that actively engages in Blockchain-related cases and research.
Apart from the exchange-related case, they have published insight calling on the US government to avoid falling behind even further in regards to Blockchain innovation and has urged lawmakers to increase venture capital focus on Blockchain technology.