Poloniex exchange charged by SEC

[dkbit98]

Same thing that happened to Binance is happening to other exchanges, SEC Charges Poloniex for Operating Unregistered Digital Asset Exchange.
Poloniex will pay $10 million (or around 218 BTC with todays rate) to settle charges for operating unregistered online exchange and for not registering with regulators in US.
No word from Justin Sun, who I believe is one of the owners of this exchange but he is better known for tron and lunch with Warren Buffett.

Without admitting or denying the SEC’s findings, Poloniex agreed to the entry of a cease-and-desist order and agreed to pay disgorgement of $8,484,313, prejudgment interest of $403,995, and a civil penalty of $1.5 million for a total of $10,388,309.

https://www.sec.gov/news/press-release/2021-147

Poloniex today posted their old announcement because some US customers have problem accessing their accounts:

Refer to the article below if you have issues accessing your account

https://twitter.com/Poloniex/status/1424748403943223298

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[The Sceptical Chymist]

Wasn't Poloniex a US-based company to begin with?  I didn't look it up before starting to write this post, but I could have sworn that Polo was one of the registered US exchanges, sort of like Coinbase.  I do recall their fall from grace a year or two ago, when they went from being one of the most used exchanges to practically having nobody using them--and that they did some sort of reincorporation that moved their base of operations.

Justin Sun might be a bit odd, but he's not a fool as far as I know.  You would have thought he'd have complied with US regulations if Poloniex was still doing business there, no?

[dkbit98]

Justin Sun might be a bit odd, but he's not a fool as far as I know.  You would have thought he'd have complied with US regulations if Poloniex was still doing business there, no?

Poloniex was founded in 2014 but I doubt it was created in United States, than it was purchased by Circle in early 2018 for $400 million, and then new investors came (probably from China) and one of them was Justin Sun.
He is not so smart, and being rich or having lot of Bitcoins doesn't mean he is smart by definition.

Justin Sun, founder of crypto platform Tron, said he is part of the investor group that recently acquired Poloniex from fintech firm Circle, after denying his involvement initially.

https://www.coindesk.com/despite-denials-tron-founder-confirms-investment-in-poloniex-crypto-exchange

There is Poloniex ANN in forum from 2014, and @busoni member have two scam accusations:
https://bitcointalk.org/index.php?topic=420836.0

[The Sceptical Chymist]

He is not so smart, and being rich or having lot of Bitcoins doesn't mean he is smart by definition.

I didn't say he was smart; I said I didn't think he was a fool, and by that I meant he generally knows what he's doing in the world of crypto--and I don't think the guy is an idiot or even dumb for that matter.  I certainly didn't think he would have been foolish enough to try to operate Poloniex in the US without complying with the regulators, but apparently he was (so maybe I'm wrong about him).

Thanks for the info about Poloniex's recent history.  Maybe it was the part about being owned by Circle that I was thinking about when I said I thought they were a US-based company.  Circle is operated out of Boston last I knew, so I think I assumed Poloniex was as well. 

On a related note, it really was amazing how fast Poloniex slipped in terms of popularity.  They used to be discussed a lot on the forum when I first registered, and before they changed hands after 2018 it seemed like everyone just stopped using them.  I'm not exactly sure why that happened, because they did offer bitcoin and a lot of altcoins, and I don't remember their fees being outrageously high (at least from other members' reports). 

[o_e_l_e_o]

Justin Sun is a marketer, nothing more. Tron is complete trash, with large parts of the code plagiarized from other projects and poorly mashed together, and it does nothing that Bitcoin or Ethereum already do far better. His acquisition of BitTorrent Inc has completely ruined the company and screwed up development of the BitTorrent protocol. He knows how to get newbies interested in his pump and dump scams, but that's all. Someone who thinks he can get away with stealing code from others and passing it off on his own is not the kind of person to sit down and make sure he is meticulously complying with rules and regulations.

Still, $10 million is but a slap on the wrist for Poloniex. With daily volumes of $150-200 million and trading fees up to 0.15%, this is like a month's profits for them.

[hugeblack]

I've always thought that Justin Sun is a person who likes to show off and can solve problems but he is a rich person who tries to increase his money in every way, maybe a good looking version of McAfee.

10 million dollars is not a huge amount, and therefore the problem that the platform has fallen into seems normal, but I hope that the way it is managed will be moved from people like Justin Sun.
Binance also try to hide a lot about their location and how they comply with legislative regulations.
Personally and for people in the US, as long as you want to use a centralized platform, there's no reason for any alterative of Coinbase.

[dkbit98]

I said I didn't think he was a fool, and by that I meant he generally knows what he's doing in the world of crypto--and I don't think the guy is an idiot or even dumb for that matter.

This short video is showing what kind of fool he actually is:
https://www.youtube.com/watch?v=qF5ojlv6TL0

Justin Sun is a marketer, nothing more.

And he is a bad marketer if I may add, but I don't think he will be happy losing that 10 million even if it means nothing for Poloniex i we look at the bigger picture.

Personally and for people in the US, as long as you want to use a centralized platform, there's no reason for any alterative of Coinbase.

I don't think so, it only leads to more and more centralization of power.
There are a lot of great alternatives for Coinbase like Kraken for example, and you can still use P2P trading or even better use Bisq and go full decentralized trading.

Polonied released official announcement on Twitter and they are now playing dumb claiming they it has no impact on them and they have to connection with Poloniex LLC, because entity running Poloniex is Polo Digital Assets 
What a joke!

Public address loudspeakerAnnouncement on SEC’s Charges Against Poloniex LLC

In light of the media reports on SEC’s charges against Poloniex, we would like to clarify that the entity running Poloniex is Polo Digital Assets.The aforementioned charges will not have any impact on Poloniex's businesses.

https://twitter.com/Poloniex/status/1424960367189393409

[leea-1334]

I am actually really surprised that this did not happen to them earlier. I mean,,, Poloniex was really really huge back in 2017. I remember all the loan platforms there you could even loan Bitcoin for 1 hour and make 1% profit just doing nothing.

This $10 million fine must be backdated to those days.

[hello_good_sir]

Everyone was sort of expecting this.

Poloniex offering legacy accounts was definitely not something that SEC was a fan of, and I think that holds true to this day.

They are probably counting their lucky stars that they were not charged with something more serious - $10 million dollars for them is peanuts when you consider that they were the largest crypto exchange back in the day turning over hundreds of millions if not billions per day.

[Bitcoin_Arena]

He is not so smart, and being rich or having lot of Bitcoins doesn't mean he is smart by definition.

I didn't say he was smart; I said I didn't think he was a fool, and by that I meant he generally knows what he's doing in the world of crypto--and I don't think the guy is an idiot or even dumb for that matter.  I certainly didn't think he would have been foolish enough to try to operate Poloniex in the US without complying with the regulators, but apparently he was (so maybe I'm wrong about him).

He's just one of those lucky shills who succeeded into selling his shitcoin to clueless newbies and investors during the ICO boom and after raising millions, he felt he could buy anything he wanted. I guess Karma is catching up with him.

Justin Sun is a marketer, nothing more. Tron is complete trash, with large parts of the code plagiarized from other projects and poorly mashed together,

Spot On, I have never seen a completely plagiarized project get shoved down newbies' throats like Tronix

[Darker45]

It is interesting how Poloniex is approaching the situation. Rather than be entangled in complicated legal hassles, it simply chose to pay the penalty in millions even without admitting nor denying the allegations and cease and desist. I hope the company's approach of letting the money talk will let them avoid further legal tussle against the SEC. I guess $10 million is worth it, provided the SEC would stop hounding them after that.

Anyway, it sounds weird for them to claim that "in order to be competitive in the global market, we were not able to include US customers in the spin out." I don't know what exactly they mean by this. But it seems to me the US market is huge enough vis-à-vis the whole global market. So I guess it's a poor excuse or alibi for their failure or perhaps laziness or lack of interest.  

[o_e_l_e_o]

I've always thought that Justin Sun is a person who likes to show off and can solve problems but he is a rich person who tries to increase his money in every way, maybe a good looking version of McAfee.

I compare him more to CSW. A liar and a fraud, who made his money from stealing other peoples' work and fooling newbies in to thinking he is something he isn't.

And he is a bad marketer if I may add, but I don't think he will be happy losing that 10 million even if it means nothing for Poloniex i we look at the bigger picture.

Of course not, but if it keeps the SEC off their backs for another period of time, then it's by far the lesser of the two evils for them. Circle is valued at $4.5 billion. $10 million is chump change.

[leea-1334]

It is interesting how Poloniex is approaching the situation. Rather than be entangled in complicated legal hassles, it simply chose to pay the penalty in millions even without admitting nor denying the allegations and cease and desist. I hope the company's approach of letting the money talk will let them avoid further legal tussle against the SEC. I guess $10 million is worth it, provided the SEC would stop hounding them after that.

Anyway, it sounds weird for them to claim that "in order to be competitive in the global market, we were not able to include US customers in the spin out." I don't know what exactly they mean by this. But it seems to me the US market is huge enough vis-à-vis the whole global market. So I guess it's a poor excuse or alibi for their failure or perhaps laziness or lack of interest.  

For sure. And if you think that they made most of their profits in BTC and ETH in 2017,,, and of course prices right now mean they are triple the amount of fiat in profit, then it is easy to imagine what $10 million is, which is essentially 250 BTC. For sure they made more than that amount!

I foresee they will get acquired by a competitor at this rate though.

[magneto]

Yeah, not surprising at all.

Binance, Poloniex and Bittrex all offered legacy anonymous accounts and will attract a lot of regulatory attention as a result.

Poloniex is almost a dead exchange anyway, so I'm sure that the founders are just happy they were able to benefit from one phase of the crypto boom and be content with the money that they're getting. The fines aren't actually too large compared to their revenues anyway.

[stompix]

Justin Sun is a marketer, nothing more. Tron is complete trash, with large parts of the code plagiarized from other projects and poorly mashed together, and it does nothing that Bitcoin or Ethereum already do far better. His acquisition of BitTorrent Inc has completely ruined the company and screwed up development of the BitTorrent protocol.

Brutality level 100! But yeah, a perfect summary of all the things related to Sun and his chain.

Want to add something more to the list of his success stories?
Justin Sun Joins Research Project at Communist Party School
I'm sure he will be in charge of decentralized, permissionless, uncensorable open source development there.  

Poloniex was founded in 2014 but I doubt it was created in United States, than it was purchased by Circle in early 2018 for $400 million, and then new investors came (probably from China) and one of them was Justin Sun.

Poloniex was US-based, it was acquired by Circle, then sold  to unknown investors and forming a new company and ended in Bermuda then again moved to Seychelles.  

Thanks for the info about Poloniex's recent history.  Maybe it was the part about being owned by Circle that I was thinking about when I said I thought they were a US-based company.  Circle is operated out of Boston last I knew, so I think I assumed Poloniex was as well.  

You were right, Poloniex was US-based, it was headquartered then in Boston alongside Circle till 2019 when it went offshore and dropped all US customers.The fine that is paying now is for the activity while being based in the US and serving US customers.

[Woodie]

With all this forced regulation that is being imposed on most of our centralized exchanges, is the future of cryptocurrencies safe? It might not be SEC but any other local regulator around the world are all trying to flex their authority, could this be possible that there is an invisible hand of competitor exchanges in trying to get rid of some of these popular exchanges??

[o_e_l_e_o]

Want to add something more to the list of his success stories?

The CEO of BitTorrent working for the Chinese Government. How far has that company fallen!

With all this forced regulation that is being imposed on most of our centralized exchanges, is the future of cryptocurrencies safe?

Bitcoin will always be safe against the regulation of centralized exchanges. The worse things become for centralized exchanges, and the more they have to invade the privacy of their users (not to mention freezing coins and accounts), then more and more users should start moving away to decentralized exchanges and peer to peer trading. This is only a good thing for bitcoin, and further bolsters its decentralized and censorship-resistant nature.

[stomachgrowls]

With all this forced regulation that is being imposed on most of our centralized exchanges, is the future of cryptocurrencies safe? It might not be SEC but any other local regulator around the world are all trying to flex their authority, could this be possible that there is an invisible hand of competitor exchanges in trying to get rid of some of these popular exchanges??

Regulation in exchangers doesnt mean that it would really be over in talks of future of cryptocurrencies.I wont be surprised if Binance would really be next on line which we are recently seeing that they are

being squeezed off and it is something connected to that minimizing of daily limits. Remembered on how Poloniex and Bittrex do fly out with colors back in the past but those popularity and reputation
had been wiped out when government had really make some involvement.