Circle Pay to Shutter Doors, in Wake of Poloniex Troubles and Circle Layoffs

Circle, a fintech startup backed by the likes of Goldman Sachs, Bitmain, and Baidu, announced that it would discontinue (or “sunset”) its mobile-based payments app, Circle Pay. Pay had been a competitor for apps like Venmo, Cash App, and Revolut.

The process should be complete by the end of July, when all users’ funds will be returned to associated bank accounts. No explicit reason was given for the closure.

Circle got off the ground in 2013, and last year bought the Poloniex cryptoasset exchange, which many saw as a sign of increasing institutional interest at the time. More recently, Circle launched a USD-pegged stablecoin, USD Coin (USDC), which is legally audited to prove USD backing.

More recently, CryptoGlobe reported that Circle cut their staff by 10% (30 people), with CEO Jeremy Allaire pointing to “an increasingly restrictive regulatory climate” in the U.S.; a climate which apparently forced circle to remove nine cryptoassets from trading on their exchange. Indeed, Bittrex and Binance have both this month followed in Circle’s footsteps, as it were, with massive curtailments of their U.S. trading offerings.

Poloniex Troubles

Poloniex, a once central cryptoasset exchange in the industry, has hit a rough patch recently, when its leverage trading system proved unable to function correctly and pay the winning counterparties of a trade.

This occured when the price of an obscure cryptoasset, CLAM, collapsed, and with it the long positions of some Poloniex customers. The margin short trades could not be repaid because the principals were also held in CLAMs, rather than bitcoin.

Poloniex initially made the decision to distribute this loss over all of its margin traders, which make up only 0.4% of Poloniex customers according to the exchange. Poloniex were criticized both for “socializing” losses in this way, and for allowing such highly leveraged trading on low liquidity assets. They have since decided to make whole customers who were affected by the generalized losses.

Update 10:30 UTC 18th June 2019: This article was updated to include Poloniex's decision to make customers who were affected by the generalized losses whole.