Circle

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Circle Internet Financial
Circle.png
Founded 2013
Headquarters Boston
Key People Jeremy Allaire and Sean Neville, Co-Founders
Employees > 150
Products Payments
Twitter @circlepay
LinkedIn Profile
Facebook circle
Website Circle Homepage
Releases Company News
Blog Circle blog

Circle is a cryptocurrency exchange operator whose origins are in cryptocurrency payment technology but whose interests have expanded into investments, OTC services and cryptocurrency trading.

Background

Circle Internet Financial was launched in October 2013 with $9 million in investments.[1] In late April 2015, Goldman Sachs announced that along with IDG Capital Partners it was planning to lead a $50 million financing round into Circle.[2]

Business Overview

In late February 2018 Circle announced that it was purchasing Poloniex, one of the largest cryptocurrency markets at the time.[3] Listing more than 100 cryptocurrency-to-cryptocurrency pairs, Poloniex was the 35th largest cryptocurrency trading platform globally by volume in late September 2018 according to CoinMarketCap, an online data aggregator and reporting service.[4]

Bloomberg reported in June that Circle was planning to apply for both banking and securities licenses so its customers could deposit insurable funds with it and trade cryptocurrencies that might be deemed to be securities under U.S. regulations.[5]

In May 2019, sources from Circle reported that the company had revised its fundraising goal from $250 million to $150 million, a decrease of 40 percent. On Twitter, Circle co-founder Jeremy Allaire said that 30 positions had been "eliminated" within the company. Allaire said this was due to "new market conditions" and an "increasingly restrictive regulatory climate in the United States. Another employee at Circle said that "no one from the trade desk got cut."[6] In September 2019, Circle said that it would suspend its research reports to allow it "time to evaluate our contribution and overall strategy."[7]

Circle shares offered at discount on alternative investment platform

In February 2019, The Block reported that private shares of Circle were being offered at a massive discount on SharesPost, a platform] for accredited investors to exchange shares of private companies (the discounted shares were being sold at $3.80, while shares of Circle at the time of its Series E fundraise in May 2018 were being sold at $16.23). This implied a significant disparity in the company's total valuation ($3.01 billion vs. $705 million), depending on the number of shares that were being sold at the discounted price. The story said it was unclear how many shares were being offered at this price.[8]

SeedInvest acquisition

In October 2018, Circle co-founders Jeremy Allaire and Sean Neville announced that Circle would acquire crowdfunding Internet platform, SeedInvest, which also included a registered brokder Dealer, SI Securities. According to the co-foundrs, "The SeedInvest product includes many of the end-to-end capabilities needed for executing regulated crowdfunding, including startup due diligence, securities issuance, investor accreditation, payments and securities custody, as well as a broad range of innovative tools for startups to market their crowdfunding offerings online in a compliant fashion. With the merger and approval from key regulators, these capabilities will be expanded to support crypto-denominated investments including using fiat stablecoins such as USDC, as well as issuing and offering tokenized securities."[9]

Circle reported on March 4, that the transaction had been approved by U.S. self-regulatory organization FINRA and was closed.[10]

On April 26, 2019, Circle and SeedInvest revealed in a blogpost that SeedInvest had been approved by Finra to operate an ATS which will let it trade equities.[11]

In August 2019, Circle posted on its job board that it was looking for a general partner for a $100 million venture capital fund for SeedInvest.[12]

Circle Trade

Circle Trade was developed to respond to internal demand for liquidity stemming from customers' use of its cryptocurrency app. It grew into being a major presence in the institutional OTC cryptocurrency marketplace. In June and July 2019, Circle Trade faced a number of staff departures as both its head of trading, Dan Matuszewski, and its head of institutional sales, Beatrice O’Carroll, left the operation along with at least four other employees.[13][14]

Stablecoin

In September 2018, Circle launched the Centre Consortium to develop and launch a new stablecoin tied to the U.S. dollar. The company was joined by the U.S.-based exchange Coinbase in October 2018.[15][16]

On January 17, 2019, the Centre Consortium published an attestation provided by the independent accounting firm Grant Thornton to Circle that there were $251,211,209 held by Circle in custody accounts against the total issuance of 251,211,148 USDC.[17]

In late January 2019, Circle released a report that over 100 crypto-focused businesses, including exchanges, wallets, platforms, apps, and service providers had adopted USDC.[18]

Bermuda

Circle received a Digital Assets Business Act license from Bermuda in July 2019 and the company announced in a blog post that it would move the Poloniex business and operations supporting non-U.S. residents to an office in Bermuda. After a transition period, the non-U.S. customers will be moved to the new "Circle International Bermuda" entity. The company said that its new Bermuda license covers the operation of payment services, custody, exchange, trading and other financial services for digital assets. The company also indicated that it would expand its list of tradable instruments for non-U.S. persons.[19]

Having been bought by Circle a year earlier Poloniex's rank had fallen to 77th largest cryptocurrency exchange in the world, the fifth largest U.S.-based exchange behind Kraken (42), Coinbase Pro (43), Bittrex (51), and Gemini (73), according to CoinMarketCap.[20] By July 2019, according to Circle, 70% of Poloniex's customers were based outside of the United States.[21]

John Lothian News

Circle was highlighted in a recap of Consensus 2018 by CMW contributing editor Chuck Mackie. You can read the article here.

References

  1. Circle Raises $9M Series A From Accel And General Catalyst To Make Bitcoins Mainstream. TechCrunch.
  2. Goldman and IDG Put $50 Million to Work in a Bitcoin Company. New York Times.
  3. Goldman-backed startup Circle buys Poloniex cryptocurrency exchange. Reuters.
  4. Poloniex. CoinMarketCap.
  5. Crypto Unicorn Circle Aims to Expand Into Regulated Banking. Bloomberg.
  6. Sources: Circle slashes reported $250 million fundraising goal by $100 million. The Block.
  7. Research Program. Circle.
  8. ‘Prop firms are hard to sell:’ Shares for crypto exchange Circle are being offered at a massive discount. The Block.
  9. Circle announces acquisition of broker-dealer and leading equity crowdfunding platform SeedInvest. Circle.
  10. Circle Closes Acquisition of SeedInvest, Another Step Towards the Democratization of Finance. Circle.
  11. Circle’s SeedInvest Takes Step Toward Tokenizing Stocks With Trading License. CoinDesk.
  12. Circle is raising $100 million for its new venture fund. The Block.
  13. Circle’s Head of Trading Is Leaving the Crypto Startup. CoinDesk.
  14. Circle Trade has lost at least 6 employees, and its unit head is the latest. {{{org}}}.
  15. Cryptocurrency giants Coinbase and Circle form joint venture to boost adoption of dollar-backed digital coins. CNBC.
  16. USD Coin Arrives: Circle’s Crypto Stablecoin Is Now Trading. Coindesk.
  17. Independent Accountant Report. Centre.
  18. Circle Expands USDC Ecosystem to Over 100 Partners. FinanceMagnates.
  19. Circle Expands International Offerings with New Bermuda Operations and Digital Assets Business License. Circle.
  20. Top 100 Cryptocurrency Exchanges by Trade Volume. CoinMarketCap.
  21. Circle Moves Exchange Operations Offshore With New Bermuda Office. CoinDesk.