Circle, a company specializing in digital assets and over-the-counter swaps, has issued an urgent warning to Poloniex US customers who have not yet withdrawn their funds. The warning comes after Circle announced in October 2019 that it would spin off the Poloniex exchange and halt trading services for American customers as of November 1. Now, with the final shutdown date approaching, Circle is detailing what will happen to accounts that still hold assets.
December 16 Deadline: Site Shutdown and Wallet Access Termination
According to Circle's plan, the existing Poloniex US website will be closed on December 16, 2019, and all access to existing wallets on the platform will be terminated. Any cryptocurrencies still in Poloniex US wallets on that date will be gradually converted into USDC, a dollar-pegged stablecoin. Circle intends to launch a new withdrawal website for customers in the first half of 2020, where users can retrieve their USDC funds. However, the company warns that service fees may be charged for USDC stored on the new site.
Two Types of Fees: Monthly Service Fee and One-Time Dormancy Fee
Circle explains that Poloniex US customers who do not withdraw their assets may be subject to two fees: a monthly service fee that applies as long as the user continues to have assets stored on the platform, and a one-time dormancy fee triggered when an account becomes dormant under applicable regulations. To reassure customers, Circle states that “you will never be charged more than your total account balance.”
Risk of Asset Forfeiture: Unclaimed Digital Assets May Be Sent to State Governments
The most concerning aspect of the announcement is the warning regarding unclaimed assets. Circle explicitly states: “Assets in dormant accounts may be sent to the account holder’s state, consistent with regulations for abandoned property. Poloniex US also may charge inactivity fees prior to sending abandoned property to a state consistent with applicable regulations.” This means that if customers ignore their accounts for an extended period, their crypto assets could ultimately be turned over to state governments, rather than being held by Circle indefinitely.
Background: Circle’s Divestiture of Poloniex and Regulatory Pressures
Circle acquired Poloniex in 2018 but subsequently faced regulatory uncertainty in the United States. In October 2019, Circle announced that it would sell Poloniex to a newly formed Asian investment group and discontinue trading services for U.S. customers. This forced a large number of American users to urgently migrate their assets. The current warning is part of Circle's process to finalize its responsibilities to Poloniex US customers before the exchange is fully handed over.
Circle's blog post reiterates: “Poloniex US customers must withdraw their assets before December 16, 2019. If Poloniex US customers don’t withdraw their assets before then, they’ll face several actions: They’ll lose direct access to their Poloniex US accounts. Their assets will be traded into and stored as USDC. They may be charged a monthly service fee and/or a one-time dormancy fee.”
The crypto community has responded with mixed reactions. Some criticize Circle for imposing fees and the threat of asset seizure, arguing it contradicts the self-custody ethos of cryptocurrency. Others view it as a necessary step to comply with abandoned property laws. Regardless of the debate, every Poloniex US customer should act promptly to ensure the safety of their digital assets.