CEO Ted Livingston announced the decision Monday evening via a company blog post. The news comes on the heels of recent reports that Kin was laying off 70 employees.
The layoffs will shrink Kin to 19 core developers so as to “ensure that KIN can scale to become the true currency of the internet going forward.”
The current downsizing is a dramatic comedown for the company. In 2015, the company was reportedly valued at $1 billion after receiving a $50 million investment from Chinese tech company Tencent.
Several cryptocurrencies are carefully watching the Kik lawsuit to see how SEC will proceed with such cases.
In a recent segment on Bloomberg, analysts argued that the lawsuit showcases the increasing comfort the SEC has with crypto-securities law.
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The Kik app’s user base was primarily viewed as a shortcut to launching Kin, however, the app never succeeded in fulfilling the widespread adoption of the cryptocurrency.
“Kin has over 2,000,000 monthly active earners, and 600,000 monthly active spenders. While losing Kik will have a big impact on these numbers, the continued growth of the Kin Ecosystem has more than made up for it,” Livingston noted.
The SEC’s lawsuit against Kik asserts that its initial coin offering (ICO) for Kin constituted an unregulated sale of securities. Not incidentally, the ICO was a monumental success having raised $100 million.
In the lawsuit, the SEC suggests the company’s original sin was tying Kin’s crypto success to Kik’s business success, thus effectively defining it as a security.
Kik’s responded to the lawsuit by alleging that the SEC was taking quotes from company officials out of context. They assert that the SEC has twisted facts in its lawsuit (and giving three examples of this in their response).
Moreover, Kik suggests that the SEC has drawn out the lawsuit in a bid to drain their financial resources (Livingston notes that the lawsuit has cost the company $6 million so far). They believe the SEC has pressured exchanges to delist Kin as well.
The SEC lawsuit has undoubtedly hurt investors, as Kin’s price has fallen roughly 70% since being filed (falling from $0.000036 to $0.000010).
With the Kik app shutting down, the company has decided to refocus its efforts on KIN.
“Kin is a currency used by millions of people in dozens of independent apps. So, while the SEC might be able to push us around, taking on the broader Kin Ecosystem will be a much bigger fight. And the Ecosystem is close to adding a lot more firepower,” Livingston assured readers.
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