Poloniex is one of the larger American cryptocurrency-to-cryptocurrency trading platforms. It was launched in January 2014. According to CryptoCompare, which among other things publishes a ranking of cryptocurrency trading platforms, Poloniex earned a score of AA for trading platform quality, placing it second among the 211 platforms it reviewed worldwide in June 2019.
Circle Internet Financial, Ltd. acquired Poloniex on February 26, 2018, reportedly for $400 million. 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.”
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. By late July 2019, however, Poloniex’s market share had declined and its ranking was 77th among cryptocurrency trading platforms. According to Circle, Poloniex’s parent, by July 2019 70% of Poloniex’s customers were based outside of the United States.
Poloniex was one of 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 provides margin trading on its platform.
In October 2018, Poloniex announced it had removed margin trading features in order to comply with unspecified U.S. federal laws. In May 2019, the exchange announced that it would be disabling trading for nine cryptocurrencies due to “regulatory uncertainty.” The cryptos that were disabled were ARDR, BCN, DCR, GAME, GAS, LSK, NXT, OMNI, and REP.
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.
On May 26, 2019, an altcoin being 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, because “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.”
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.
Products and Services
Poloniex offers over 100 BTC markets 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.
Digital Asset Margin Trading
Poloniex offers margin trading for non-U.S. customers. To accomplish this, 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.
Poloniex de-lists 23 trading pairs
Citing low trade volume, Poloniex announced on August 15, 2019 that it would be de-listing 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.
Tristan D’Agosta – Founder and CEO