Poloniex

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Poloniex
Poloniex.png
Founded 2014
Headquarters Wilmington, Delaware
Key People Tristan D'Agosta, founder and CEO
Employees 1-10
Twitter @poloniex
Facebook poloniex
Website Poloniex home
Releases Company News

Launched in January 2014, Poloniex became one of the larger American cryptocurrency trading platforms. After being acquired by Circle in February 2018, Poloniex stopped serving the U.S. market and moved its legal headquarters to Bermuda 18 months later. Shortly thereafter it was acquired by a consortium that included Justin Sun's TRON.[1][2]

Based on trading volume over the previous 24 hours, on August 10, 2020 Poloniex ranked 52nd among cryptocurrency trading platforms worldwide according to CryptoCompare, an online data aggregator.[3] CryptoCompare, which also publishes a quality ranking of cryptocurrency trading platforms, gave Poloniex a score of AA for trading platform quality, placing it second among the 211 platforms it reviewed worldwide in June 2019.[4]

Background

Poloniex was hacked two months after its launch, resulting in a loss of 12.3 percent of its customers' bitcoin holdings.[5]

Circle Internet Financial, Ltd. acquired Poloniex on February 26, 2018, reportedly for $400 million.[6] In a blog post regarding the acquisition, Circle co-founders Sean Neville and Jeremy Allaire said that in addition to leveraging Poloniex's geographic reach into 100 different countries, they looked "...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."[7]

History

Listing more than 100 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.[8] By late December 2019, however, Poloniex's market share had declined and its ranking was 75th among cryptocurrency trading platforms.[9] According to Circle, Poloniex's parent, by July 2019 70% of Poloniex's customers were based outside of the United States.[10] As noted previously, by August 2020, Poloniex was ranked 52nd by trading volume.

Poloniex was one of the 13 cryptocurrency exchanges doing business in New York State that were requested by the Attorney General's Virtual Markets Integrity Initiative to provide detailed information about its operations and policies and was one of nine that responded. In its response Poloniex indicated, among other things, that it provided margin trading on its platform.[11]

In October 2018, Poloniex announced it had removed margin trading features in order to comply with U.S. federal laws.[12] In May 2019, the exchange announced that it would be disable trading for nine cryptocurrencies due to "regulatory uncertainty." The cryptos that were disabled were ARDR, BCN, DCR, GAME, GAS, LSK, NXT, OMNI, and REP.[13]

Having received a Digital Assets Business Act license from Bermuda, Circle announced in a July 22, 2019, blog post that Poloniex would move the business and operations supporting non-U.S. residents to an office in Bermuda. 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.[14]

Circle announced on October 18, 2019, that it was spinning out Poloniex to an "Asian-backed" investment group, Polo Digital Assets, Ltd.[15] After repeatedly denying being involved in the investment, TRON's founder, Justin Sun, told a Poloniex-Tron joint conference, that he had participated.[16] Poloniex halted trading by U.S. residents at the beginning of November 2019.[17]

In a blog post dated December 19, Poloniex announced a new customer type, Level 1, that does not require that anti-money laundering procedures to be followed for withdrawals of up to $ 10,000 worth of cryptocurrency or fiat money.[18]

Poloniex socializes to cover margin loss

On May 26, 2019, an altcoin traded on Poloniex, CLAM, experienced a severe price crash. As a result, those trading CLAM defaulted, causing a huge loss for bitcoin margin lenders. Poloniex attempted to rectify the situation by socializing (borrowing from customer funds) approximately 1,800 BTC from active BTC margin loans. A representative of the exchange said that it spread the loss across BTC lenders, including those with BTC loans that were not active during the crash. According to the representative, "all BTC loans on Poloniex are lent in a common pool that is shared across all markets and borrowers, but we want to emphasize that we are pursuing defaulted borrowers to get them to repay the BTC they owe to lenders and exploring other ways to defray losses." The representative also said that as the exchange recovers funds, it "will return them to affected lenders.”[19]

On June 14, Poloniex distributed a total of 180 bitcoins to 10 percent of the users affected by the crash. In August, Poloniex began crediting trading fees in bitcoin for lenders who lost funds in the CLAM crash. The exchange said in a blog post that fees would be covered for affected accounts back from June 6 until they are fully repaid.[20][21]

In March 2020, Poloniex released a statement to its users affected by the CLAM crash, saying that it had deposited "a payment of up to 0.0047 BTC to every impacted customer who has not been fully repaid yet." The statement declared that those affected by the crash whose losses were below that amount had been fully repaid, and that those who still had not been fully repaid would have trading fees altered to help recoup the rest of their losses. The statement acknowledged that not everyone may be satisfied with the offer, but that Poloniex would continue to try to repay its customers until everyone was taken care of. Some traders expressed outrage, implying that Poloniex disbursing bitcoin to its customers after its price had fallen (due to the coronavirus crash of March 2020) was a cheap way to repay those affected by the crash.[22]

Steemit soft fork controversy

On March 2, 2020, Poloniex invited public controversy when it joined Huobi and Binance to undo a soft fork on Steemit by using their collective voting power from STEEM tokens held by the exchanges. The soft fork had been implemented by Steemit "witnesses" who were trying to block TRON from increasing its influence over Steemit after the two organizations had entered into a strategic partnership. The dispute and attendant controversy resulted in Steemit asserting extraordinary rights to control the STEEM blockchain.[23][24]

Litigation

In June 2020 Poloniex, along with Bittrex, was added as a defendant in a class-action suit filed the previous August against Bitfinex and Tether. The suit alleges that the parties participated in a "sophisticated scheme that coopted a disruptive innovation — cryptocurrency — and used it to defraud investors, manipulate markets, and conceal illicit proceeds." The suit complains that the platforms conspired to transfer among themselves U.S. dollar Tether that fraudulently was not fully backed by U.S. dollar deposits.[25]

Products and Services

Poloniex offers more than 100 digital assets for trading. Users are required to be 18 years or older. Poloniex has no deposit or withdrawal fees, but charges a flat rate of 0.2 percent for all transactions.[26]

By August 2020, Poloniex had become one of the leading cryptocurrency trading platforms for DeFi tokens according to The Block Crypto.[27]

Poloniex offers DeFi trading through its "Poloni DEX" marketplace. It also, separately, offers bitcoin futures.[28]


Digital Asset Margin Trading

Poloniex offers margin trading for non-U.S. customers. Poloniex's traders, as well as Poloniex itself, lend cryptocurrency at an interest rate for borrowers. These loans come from a common pool of digital assets which are shared across all markets and borrowers.[29]

Poloniex de-lists 23 trading pairs

Citing low trading volume, Poloniex announced on August 15, 2019 that it would de-list 23 trading pairs on its platform the following day.

The pairs that were announced for removal were LTC/XMR, DASH/XMR, ZEC/XMR, MAID/XMR, NXT/XMR, BCN/XMR, LSK/ETH, GNT/ETH, MANA/ETH, QTUM/ETH, STEEM/ETH, OMG/ETH, LOOM/ETH, SNT/ETH, CVC/ETH, KNC/ETH, GAS/ETH, BNT/ETH, LOOM/USDT, SNT/USDT, KNC/USDT, BNT/USDT and FOAM/USDC.[30]

Key People

Tristan D'Agosta - Founder and CEO

References

  1. Goldman-Backed Circle Agrees to Buy Crypto Exchange Poloniex. Bloomberg.
  2. Poloniex to Spin Out of Circle. Circle.
  3. Exchanges. CryptoCompare.
  4. Exchanges. CryptoCompare.
  5. Poloniex Loses 12.3% of its Bitcoins in Latest Bitcoin Exchange Hack. CoinDesk.
  6. Goldman-Backed Circle Agrees to Buy Crypto Exchange Poloniex. Bloomberg.
  7. Circle Acquires Poloniex. Circle.
  8. Poloniex. CoinMarketCap.
  9. Poloniex. CoinMarketCap.
  10. Circle Moves Exchange Operations Offshore With New Bermuda Office. CoinDesk.
  11. Virtual Markets Integrity Initiative Report. Attorney General of the State of New York.
  12. Crypto Exchange Poloniex Removes Margin and Lending Products for US Users. Cointelegraph.
  13. Poloniex to disable nine cryptocurrencies in the US due to regulatory uncertainty. The Block.
  14. Circle Expands International Offerings with New Bermuda Operations and Digital Assets Business License. Circle.
  15. Poloniex to Spin Out of Circle. Circle.
  16. Despite Denials, Tron Founder Confirms Investment in Poloniex Crypto Exchange. CoinDesk.
  17. Trading for US Poloniex Customers Has Ended. Circle.
  18. Poloniex exchange drops KYC for withdrawals of up to $10,000 per day. The Block Crypto.
  19. Poloniex could leave itself open to legal threats by socializing 1,800 BTC loss. The Block.
  20. Investors Who Lost Big in Poloniex Flash Crash Receive Bitcoin Refunds. Coindesk.
  21. Lending Pool Loss Update #2: Trading Fees are Now Being Credited to Impacted Lenders, More Actions to Follow to Fully Repay Customers. Medium.
  22. New Poloniex exec team seeks to make things right with traders who lost money from $CLAM liquidation. The Block.
  23. Tron takeover? Steem community in uproar as crypto exchanges back reversal of blockchain governance soft fork. The Block.
  24. Why Crypto Should Care About Justin Sun’s Steem Drama. Coindesk.
  25. Class action lawsuit against Bitfinex and Tether filed by lawyers who successfully sued Craig Wright. The Block.
  26. Poloniex. Crunchbase.
  27. Binance, FTX and Poloniex are most active crypto exchanges for listing DeFi tokens. The Block Crypto.
  28. Website. Poloniex.
  29. Poloniex could leave itself open to legal threats by socializing 1,800 BTC loss. The Block.
  30. Crypto Exchange Poloniex to Delist 23 Trading Pairs Due to Low Volume. Cointelegraph.