Crypto Exchange Poloniex Undergoes Shift To “Professionalize And Improve” Business
Poloniex, one of the most well-recognized crypto platforms in the cryptosphere, has just revealed that it intends to undergo a business shift to “professionalize and improve” its exchange, according to an official post issued on October 3rd.
You likely know Poloniex for its involvement with Circle, a US-based fintech startup that is partially owned by Goldman Sachs, which picked up (bought out) the exchange earlier this year, as reported by Ethereum World News previously. But, to be fair to the innovative firm, its roots go much further back than Circle’s acquisition in 2018, as the startup was established in 2014 and has since had its time in the spotlight of this nascent industry.
Its rise to fame could potentially be attributed to its margin support, which allowed speculators to borrow crypto assets to leverage their positions, subsequently increasing their exposure to market movements. Moreover, some users were also allowed to lend their crypto holdings, allowing traders to earn a fair amount of interest on their positions. However, going back to the matter at hand, it was explained in the aforementioned announcement that Poloniex will now be “taking steps” to remove its margin and lending products from the startup’s service roster for US-based customers specifically.
The Delaware-based firm explained that this drastic change is being enacted so that Poloniex stays in-line with regulatory requirements and policies. Seeing that America likely contains a good majority of the exchange’s clientele, it makes sense why the startup would be making such a change in its offerings.
Explaining how exactly it would work, the firm wrote:
In doing so, we’re also making every effort to ensure a smooth transition for customers who may be affected. We will provide more communication in the coming weeks about the final date but it will be by the end of the year and encourage customers to take steps to unwind margin positions at their convenience.
Interestingly enough, this move follows a report regarding crypto exchanges that was authored by Barbara Underwood, New York State’s Attorney General, who explained that the platforms of today are susceptible to a variety of pertinent issues and concerns. The well-established regulator explained that citizens of New York state “deserve basic transparency and accountability” while investing, whether it be via a cryptocurrency platform or something as established as the New York Stock Exchange or Nasdaq markets.
More specifically, the report still brought up three “areas of concern,” which are conflicts of interests (“proprietary” trading, overlapping lines of business etc.), a lack of wallet security, and (arguably) most importantly, a lack of processes and systems that mitigate abusive trading practices like manipulation and malicious algorithmic and/or bot trading.
Although the report didn’t make mention of margin trading, Poloniex may just be ahead of curve, deciding to shut down the product in anticipation of regulatory scrutiny, a governmental crackdown, or the like.
As aforementioned, the exchange will also be dropping three altcoins — Synereo (AMP), Gnosis (GNO), and Expanse (EXP), in the near future, so the markets that involve these crypto assets have since been shut down. It isn’t all to clear why these three altcoins are slated to be delisted, but some speculate that it could have something to do with compatibility or security concerns.
Photo by Chris Liverani on Unsplash