The payment and fintech company Circle has acquired Poloniex exchange. Weeks of rumours have finally been put to rest as the press releases were circulated earlier today.
A CryptoGlobe source says that the acquisition price is around the $400 million mark which would place it as the largest acquisition in the crypto space to date. A move that makes Circle one of the most powerful and influential crypto conglomerates.
Big news from the Poloniex team today!https://t.co/nZdjsKzWBl— Poloniex Exchange (@Poloniex) February 26, 2018
Circle is looking to strengthen its position in the crypto economy and with the purchase of Poloniex they will gain greater exposure to crypto-assets. With Coinbase bringing in $1 billion in revenue in 2017, VCs are taking a closer look at potential profits of consolidating the cryptocurrency exchanges.
The founders of Circle, Sean Neville and Jeremy Allaire wrote on their website:
“We’re proud to announce that Circle has extended its commitment to a new vision for global finance by acquiring Poloniex, a leading token exchange platform,”
A small site called ‘Modern Consensus’ broke the news almost a month earlier, but it was quickly shot down as fake news. @AriDavidPaul supposedly confirmed with his source at Circle that the news was indeed fake. Circle managed to kept their cards close to their chest in the meantime and the news story has now been vindicated.
I just posted a link to an article asserting that Circle was acquiring Poloniex. Someone helpfully replied that the article was fake news. I confirmed with Circle that the article is not correct. Circle is not acquiring Polo (according to my circle source.)— Ari Paul (@AriDavidPaul) February 3, 2018
The exchange is one of the oldest and most well-regarded within the space but has been struggling to cope with the rising demand over the 2017 rally. With many users complaining of a slow trading engine and an unresponsive support team, the exchange was losing market share to newcomers Binance and Kucoin. Despite slipping down the rankings, the exchange has the 9th largest BTC ETH market and is ranked 14th on overall volume.
Poloniex was once one of the most diverse exchanges that listed a large proportion of crypto-assets; however, with the huge rise in the number of tokens, Poloniex has taken a strict policy on listing new tokens. It is thought that this is for legal reasons as it would expose the exchange to regulatory pressure from the US. Something that Circle says they want to tackle:
“Secondly, we also look forward to scaling Poloniex up and out through market expansion and localization, increasing token listings where possible and appropriate”
Pardon From The SEC
A leaked confidential slide from a Circle presentation suggests they will be regeristing the new entity witht he SEC and FINRA as a Broker / Dealer and obtain an ATS (electronic trading marketplace) license. However, the slide goes on to explain that the SEC indicated they would not pursue any enforcement action for prior activity. This could set a precedent for exchanges wanting to exit the business without having to deal with audits and uncomfortable questions.
Just got this slide from a confidential Circle presentation. It does more to explain Circle's acquisition of Poloniex than anything I have seen today. pic.twitter.com/gRXxDeXvxl— Nathaniel Popper (@nathanielpopper) February 26, 2018
The Poloniex team is shrouded with secrecy and no verifiable identities can be linked to the exchange operations. In such a space it is not uncommon, Shapeshift's employees all work under aliases besides the CEO Erik Voorhees. It is hoped that Circle's acquisition will bring greater transparency and rigour to the wild west of finance.