Poloniex Acquired For Reported $400 Million By Circle Platform – Will Become First US Regulated Exchange

Investing, News | February 26, 2018 By:

Cryptocurrency platform Circle has acquired the Poloniex exchange for approximately $400 million.

According to an internal Circle memo on the Poloniex deal, Circle will register the new entity with the SEC and FINRA as a broker-dealer and electronic trading marketplace. As a result of that forward movement, the SEC has informed Circle that it will not pursue enforcement action on any prior incidents, and noted how Circle was the “first and only” company in the exchange space to approach them, an action viewed very favorably by the regulators.

By becoming the first registered and regulated crypto exchange, it can list and provide an exchange platform for all types of tokens, including those defined as securities, an advantage that may give Circle a huge leg up if the SEC pursues other exchanges for selling unregistered securities and hits them with sanctions.

Circle intends to run the exchange as a stand-alone business within a new Circle Holding Company subsidiary. About 80-100 new jobs will be created.

The Poloniex acquisition puts privately held Circle in position to rival Coinbase’s GDAX, currently the largest exchange for big investors. Circle has financial backing from Goldman Sachs, which has long been rumored to be starting a cryptocurrency trading desk. This acquisition will add fuel to that possibility.

Poloniex is the 18th largest cryptocurrency exchange by trade volume, according to Coin Market Cap. Fortune magazine reported that its Circle Trade division, which facilitates trading between fiat and cryptocurrency, does $2 billion a month in transactions and generated $60 million in revenue in three months.

The company also runs Circle Pay, a peer-to-peer trading system for cryptocurrency. It is also planning to start Circle Invest, an app that will simplify buying cryptocurrencies. The company, according to Fortune, is working on a protocol that would integrate PayPal, Alipay, and other digital wallets, making them interoperable.