“Winding down” and “spinning out”. That’s what Poloniex is calling their latest move in an email that was just released to all it’s customers.
It’s their way of stating that the exchange – which was initially independent but later became a member of the Circle group – is now once again leaving Circle and becoming a new, independent company called “Polo Digital Assets, Ltd.”. As a result of this move, US-based crypto traders will be locked out as of December 15th of this year.
Poloniex: A Wild History
For those unfamiliar, Poloniex is a cryptocurrency exchange that has been around for quite a long time. The exchange supported a wide number of digital assets including all of the top favorites of the time as well as numerous small cap projects, many of which no longer exist. Poloniex itself was originally based in the United States and so was initially welcoming to customers from its home country.
The exchange was the victim of a massive hacking attack in 2014 that cost the company 12.3% of its Bitcoin supply. As a result, the company reduced the portfolios of every customer by 12.3%, whether they consented or not. The company lost a lot of credibility, but they managed to keep things going somehow.
Eventually, in 2917, Poloniex was acquired by Circle, a cryptocurrency services firm that boasts having more than 8 million customers and having relationships with over 1,000 different institutions.
However, it appears that that relationship has fallen apart as once again Poloniex is looking to, as they describe it, “spin off” from their former partner and benefactor. As of result of said spin off, US customers will be blocked from the service. In an official blog post, the company wrote:
Unfortunately, in order to be competitive in the global market, we will not be able to include US customers in the spin out, so Circle will be winding down operations for US Poloniex customers.
Another Virtual Middle Finger to US Customers
One common trend that we are seeing in the crypto world over and over is American customers being regularly locked out from all sorts of products and offerings, be it access to exchanges or the ability to invest in ICO’s.
The reason for this is fairly simple. The US and its SEC have some of the most harsh and vague regulations out there. These regulations extended to everyone they define as a “US person”. That means if you are American, live in America, or hold a US passport and that of another country, you are a “US person”. As such, you are untouchable as far as these crypto outfits are concerned.
What’s particularly interesting and frustrating about this recent update from Poloniex is that the exchange has its roots in the United States, and yet it is turning its back on American customers and forcing them to empty their accounts no later than December 15, lest they lose access to anything that they have left behind.
While the email does not specify any details, it does state that the new spinoff venture is being supported by what the company describes as “a major Asian investment group”. No other details are available at this time, but it is reasonable to expect that it will become available before too long.
Just Another Brick in the Wall
It’s difficult to blame the former Poloniex for its choice to lock Americans out as this is largely the fault of the American regulatory process itself. However, it is still undoubtedly frustrating for those that once were customers of the exchange and must now move on. It is unclear as to whether or not “Poloniex” as a brand will continue to exist within circle – and it very well might. But again, at this point it is difficult to tell.
In other good news, there are still a number of exchanges that welcome Americans and that offer similar, if not better, products and services than the former Poloniex. However, this still comes as a reminder that as an American, there’s always a risk of losing access to any assets left on the platform – even one that came from America in the first place. That’s why it’s always a good idea to not leave assets stored on an exchange.