Leaked: SEC Agreed Not to Pursue Enforcement Action Against Poloniex If Acquired by Circle

  • Alex Morris
    ⭐ Features

    With Circle’s acquisition, SEC will not take legal action against Poloniex, according to a leaked slide from a confidential Circle presentation.


Leaked: SEC Agreed Not to Pursue Enforcement Action Against Poloniex If Acquired by Circle

The SEC agreed not to pursue any legal action against Poloniex if the exchange was acquired by Circle, according to a leaked PowerPoint slide. Nathaniel Popper of the New York Times posted a screenshot of the leaked slide on his Twitter feed today, noting:

“Just got this slide from a confidential Circle presentation.”

Unregulated securities

Poloniex has made a name for itself as one of the top markets for altcoin trading, spending much of the first half of 2017 as the top crypto exchange in the world, by volume. That spot has since been taken by Binance, but Poloniex is still relevant, particularly in altcoin trading. Of note is the fact that much of Poloniex’s business comes from the trading of ICO tokens, which according to the SEC, may, in fact, be unregulated securities.

Prior acts forgiven

The leaked slide states, in part:

“Circle has briefed the SEC on the transaction and indicated that upon closing that we will begin the process of registering the new entity with the SEC and FINRA as a Broker/Dealer and in turn as a licensed ATS (electronic trading marketplace).”

The document continues, saying that “the SEC was very favorable on this approach.” Furthermore, the SEC apparently “indicated that they would not pursue any enforcement action for prior activity.”

In a section labeled “The US’s First Regulated Crypto Exchange,” the slide notes that “by becoming the first regulated Crypto Exchange,” Circle will be able to “list and provide a platform” for all sorts of digital tokens, “including tokens that would be deemed securities.”

Commentary

Yesterday, when news broke of the acquisition, Popper asked on his Twitter feed: 

The SEC has said that most ICO tokens are unregistered securities and also suggested that exchanges, such as Poloniex, that trade those tokens, are likely breaking the law against trading unregistered securities. I had assumed that some sort of crackdown was coming.

— Nathaniel Popper (@nathanielpopper) 26 февраля 2018 г.

The SEC has said that most ICO tokens are unregistered securities and also suggested that exchanges, such as Poloniex, that trade those tokens, are likely breaking the law against trading unregistered securities. I had assumed that some sort of crackdown was coming.

— Nathaniel Popper (@nathanielpopper) February 26, 2018

The SEC has said that most ICO tokens are unregistered securities and also suggested that exchanges, such as Poloniex, that trade those tokens, are likely breaking the law against trading unregistered securities. I had assumed that some sort of crackdown was coming.

— Nathaniel Popper (@nathanielpopper) February 26, 2018

Then today, he posted the slide from the leaked presentation, apparently answering his own questions from the day before:

Just got this slide from a confidential Circle presentation. It does more to explain Circle's acquisition of Poloniex than anything I have seen today. pic.twitter.com/gRXxDeXvxl

— Nathaniel Popper (@nathanielpopper) February 26, 2018
Cover image via u.today
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