Poloniex Acquired By Circle The Goldman Sachs Backed Payment Company

John Medley
  • Goldman Sachs back payment company, Circle buys cryptocurrency exchange Poloniex
  • Leaked slides from Circle suggest the SEC will not investigate past wrongdoing in Poloniex 
  • The story was broke weeks prior but was denounced as 'Fake News'

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.

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,”

Sean Neville and Jeremy Allaire

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.

Crypto Consolidation

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”

Circle

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.

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.