Circle acquires Poloniex cryptocurrency exchange for $400 million

Almost overnight, Circle has once again become a key cryptocurrency figure with big plans for the future.

Circle, the company behind Circle Pay and other widely used cryptocurrency services, has acquired Poloniex at a price tag of about $400 million. The deal itself has been confirmed by Circle, but the price is just the word of an anonymous insider speaking to Fortune.

The deal makes Circle one of the biggest players in the cryptocurrency space almost overnight, and if it can bring its promised changes to the Poloniex platform, it seems likely that the exchange will also continue growing rapidly.

Circle debuted bitcoin on Circle Pay in 2014, but ended up pulling the plug after compliance costs got out of control. Now it's back in force, coming full circle appropriately enough.

Circle and Poloniex go back a fairly long way by cryptocurrency standards, with Poloniex being a former Circle customer that used the service to convert its cryptocurrency takings into fiat currency in order to pay the bills and keep the lights on.

According to Circle, the payment company was attracted to Poloniex because of its wide range of coin offerings.

"It is differentiated partly by the breadth of its offerings. It was one of the first exchanges in the world to offer meaningful liquidity in ethereum, it was the first exchange to reach $1 billion in daily volume, and it has continued to boost innovation by hosting a broad variety of carefully selected tokens," Circle wrote in a blog post announcing the purchase.

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Existing Poloniex customers might also be able to look forward to some improvements.

"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," Circle wrote. "Poloniex achieved momentum and success with rocket ship velocity — a magnificent accomplishment, but one that also comes with whiplash. Circle is a global company with the skill and experience to help in these areas as an immediate priority.

As a consumer product company, we recognize that customer experience is a core element of product experience. When growing pains mean that onboarding takes extended time for someone, or information about the availability of wallets is lacking for a customer with funds in those wallets, or systems maintenance becomes necessary without notice — we fail to achieve our goals.

While no software or product can ever be perfect, we still relentlessly aim, grind, and shoot for that perfection... our customers deserve that."

Most of the changes will be behind the scenes, and expansion across fiat and cryptocurrencies is also on the cards.

"Secondly, we also look forward to scaling Poloniex up and out through market expansion and localization, increasing token listings where possible and appropriate, and exploring the fiat USD, EUR, and GBP connectivity that Circle already brings to its compliant Pay, Trade, and Invest products. More on these efforts to come.

Lastly but perhaps most importantly: We commit to maintaining the features and services that have made Poloniex so familiar and relied upon by customers around the world. Many of the near-term changes you will experience will be behind the scenes, improving rather than dramatically or rashly altering what already works so well."

In the long run, Circle envisions Poloniex, and itself, as a trading hub for cryptocurrencies, fiat currencies and other tokens representing physical and digital 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... The future of the global economy is open, shared, inclusive, far more evenly distributed, and powerful not only for a few chosen gatekeepers, but for all who will connect.

"Our vision was always how to fuse the existing financial system with cryptocurrency as a hybrid, digital model," said Circle CEO Jeremy Allaire to Fortune. "We’re very stubborn about the overall vision, but really flexible about how to get there."

Poloniex's secretive founders share a similar fintech vision, according to Circle.

"We’ve been privileged to get to know and collaborate with the Poloniex founders and their teams over the past several months as we contemplated this union and completed extensive due diligence together, and we learned that we share a similar perspective on the future as well as the same sharp sense of urgency about immediate needs and challenges," it wrote.

Picture: Shutterstock

Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VEN, XLM, SALT and BTC.