The rumors that cryptocurrency-focused financial service firm Circle is acquiring Poloniex turned out to be true; Circle released a statement yesterday confirming the acquisition. Media reported the deal to be of about $400 million, citing the name of an anonymous person familiar with the happenings.
A little about Poloniex and Circle Internet Financial
Poloniex began its business in the year 2014 and had been one of the most established cryptocurrency exchanges. However, with the rise of other exchanges including Coinbase and Binance, the market-hold of Poloniex seemed to take a toll. The platform was listed as the 14th largest cryptocurrency exchange by data tracker CoinMarketCap.com, this January.
Cryptocurrency exchanges like Polo were not able to keep up with the meteoric rise in the trading of cryptocurrencies. During the months of Nov-Dec 2017, when crypto market was most volatile, a flood of new customers led to service outage on the platform.
Circle App allows people to make instant money transfer. The company also offers a trading operation which allows the large institutional buyers and sellers to do trading in cryptos. The market size of the business is about $2 billion a month. Circle is also on the brink of launching Circle Invest app which will help the people invest in crypto-assets directly.
What Circle gains from Poloniex?
This acquisition makes Circle one of the largest and most influential in the trade, a move well thought.
“Poloniex is already available in more than 100 countries, Circle wishes to scale it even further. We also have the plan to increase token listings and explore the fiat connectivity to dollar, euro and pound, a facility which we already offer on the mobile app.” says, Circle co-founders Sean Neville and Jeremy Allaire.
They also wish to grow the Polo platform beyond its current avatar. The plan is to develop a robust multi-sided distributed marketplace that hosts token that represents everything of value.
What to expect during the transition phase
The user of the cryptocurrency platform would see no disruption of services during the period of transition. All the updates will be done behind-the-scenes and they will be more focused on increasing the user experience, platform performance and security. “Your funds will remain safe and access to account functionality uninterrupted throughout,” the exchange added.
Is traditional financial system supporting cryptocurrencies?
Goldman Sachs was the lead investor in Circle’s $50 million funding round in the year . And now when Circle wished to acquire Poloniex, again it was Goldman Sachs who backed the deal. The mobile payments and cryptocurrency start-up raised $140m in venture capital from investors including Goldman Sachs and IDG Capital Partners.
With Goldman Sachs backing these deals, it looks like the view point of financial institutions has shifted and appears to be promising and fruitful in the eyes the traditional venture capitalist.