A Goldman Sachs-backed financial technology company Circle just got deeper into the game by purchasing cryptocurrency exchange Poloniex.
The deal is reportedly worth $400 million, according to Fortune’s Robert Hackett. Circle facilitates cryptocurrency trades worth a couple hundred million dollars in its market-making arm Circle Trade.
Poloniex said that its team would be bolstered by the operational and customer support resources from Circle “so that we can continue to scale effectively going forward.”
“We recognize that our extraordinary growth these past few years has not come without some growing pains for our users. We look forward to bringing Circle’s experience to increase the scalability and reliability of our platform and operations,” the exchange said in statement.
Even before Bitcoin took off had has its huge bull run in 2017, Circle was valued at $480 million. Now, Circle is almost unquestionably worth more than $1 billion.
One Twitter User offers some analysis on the situation:
Goldman Sachs owns a lot of Circle and now Circle owns Poloniex. Goldman Sachs now own a cryptocurrency exchange.
— Crypto Beak (@crypto_beak) February 26, 2018
This is landmark acquisition for the cryptocurrency world. Circle’s purchase of Poloniex is the first of it’s kind. An eight-figure buyout of a cryptocurrency exchange backed by a massive Wall Street name such as Goldman is huge.
The acquisition gives Poloinex far more power and influence in the cryptocurrency exchange market. Other exchanges, such as Gemini and Coinbase, might view this move with concern.
Currently, the Poloniex exchange offers trades in eight coins is currently the fourth-largest crypto exchange by 24-hour volume according to CoinMarketCap, trading almost $140 million.
“We never thought of ourselves as a Bitcoin startup. The media certainly classified us that way because we were involved with the technology,” co-founder and CEO Jeremy Allaire told TechCrunch’s Natasha Lomas in 2016.
“From the day we founded the company three years ago we’ve focused on trying to build a new consumer finance company. And one that makes money work the way the Internet works.”
Fortune recently reported that Circle is also working on Centre, a protocol that would make Alipay, PayPal, Circle and other digital wallets interoperable.
Circle said that, in the next couple of years, it expects to grow the Poloniex exchange out to include other non-crypto assets, such as physical goods and financial products such as derivatives.
“We look forward to bringing Circle’s experience to increase the scalability and reliability of our platform and operations,” Poloniex said in a statement on its website.