Goldman Sachs-Funded Circle Purchases Poloniex For $400 Million

• Circle Acquires Poloniex

Circle Acquires Poloniex

Circle Internet Financial Ltd. recently announced that it has acquired Poloniex for the cool price of $400mln.  The Goldman Sachs-backed company made the buyout public in a Monday blog post.

Rumors have swirled in recent weeks that Circle has been in talks to buy the cryptocurrency exchange @Poloniex. I can confirm here for the first time that, yes, Circle has completed the acquisition. (A source familiar with the terms told me the price tag came to roughly $400 M.)

— RobertHackett.eth (@rhhackett) February 26, 2018

This is not Circle’s first foray into the world of cryptocurrency.  Founded in 2013, the peer-to-peer payment platform allows for instant, text-sent transactions through its mobile app Circle Pay, which runs using blockchain.  In 2015, the company received the first ever BitLicense from the New York State Department of Financial Services, and it also received the very first virtual currency license from Great Britain in 2016.

Up until 2016, Circle Pay allowed for Bitcoin exchange on its platform, but it discontinued these services to focus on international payments and remittances.  Circle Trade, however, does offer crypto liquidity options to its customers, and it netted approximately $60mln in revenue from this service alone from November 2017 to January 2018. 

Now, however, the company has its hands on Poloniex, the 14th largest exchange by 24/hr volume according to CoinMarketCap at press time, and Jeremy Allaire and Sean Neville hope that this acquisition will allow Circle to expand its services even more:

“Now Poloniex addresses another key element of Circle’s product foundation: An open global token marketplace.”

In their blog post, the Circle co-founders were quick to answer the usual question one might expect from the affected individuals on the bought side of a buyout: what’s next?

“Firstly and immediately, you can expect Circle to address customer support and scale risk, compliance, and technical operations to bolster the existing product and platform,” they write, adding later that they plan on “maintaining the features and services that have made Poloniex so familiar and relied upon by customers around the world” with a focus on “improving rather than dramatically or rashly altering what already works so well.”

Moreover, Allaire and Neville are focused on improving more than just user experience.  They envision a future where Poloniex, with the addition of Circle’s services, expands trading options outside of its crypto-parameters:

“In the coming years, we expect to grow the Poloniex platform beyond its current incarnation as an exchange for only crypto assets. We envision a robust multi-sided distributed marketplace that can host tokens which represent everything of value: physical goods, fundraising and equity, real estate, creative productions such as works of art, music and literature, service leases and time-based rentals, credit, futures, and more.”

This grandiose vision includes expanding to even more countries than the 100 Poloniex currently operates in.  

Circle’s acquisition of Poloniex is the first of its kind: an 8 figure buyout of a cryptocurrency exchange by a company backed by such legacy investors as Goldman Sachs.  Perhaps the move will allow Poloniex/Circle to give other popular exchanges (especially fiat-to-crypto specific ones like Gemini and Coinbase) a run for their money.  Circle certainly bet a fat stack of cash that it will–now we’ll have to wait to see if these dollars will go the distance.