The Kik app is officially shutting down. The company will reduce its headcount to 19 people, and will focus solely on converting Kin users into Kin buyers, according to a company blog post by Kik founder Ted Livingston.
“These are hard decisions… Over 100 employees and their families will be impacted.”
– Ted Livingston
Livingston said although the Kik app will shut down, Kin is “here to stay.” The remaining team will focus on “moving the Kin blockchain forward,” he added. It appears the company is shedding its operational costs so it can fight the United States Securities Commission (SEC) in court, with Livingston saying the changes will “drop our burn rate by 85 percent, putting us in position to get through the SEC trial with the resources we have.”
He said that instead of selling some of Kik’s Kin cryptocurrency, the company made the decision to focus its “current resources on the few things that matter most.”
“These are hard decisions. Kik is one of the largest apps in the US. It has industry-leading engagement and is growing again,” wrote Livingston. “Over 100 employees and their families will be impacted. People who have poured their hearts and souls into Kik and Kin for over a decade.”
Livingston added while Kin was prepared to take on the SEC in court, the company underestimated “the tactics they would employ. How they would take our quotes out of context to manipulate the public to view us as bad actors … How they would pressure exchanges not to list Kin. And how they would draw out a long and expensive process to drain our resources.”
Earlier today, it was first reported by Israeli tech publication CTech that Kik was considering shutting down its app and that at least 70 employees of the Kin Foundation, the cryptocurrency nonprofit spun out by Kik, had been laid off on Monday.
Since the news broke earlier this evening, conversations sprung up on Twitter and Reddit with users demanding answers. A Kin Foundation spokesperson denied rumours that the organization was shutting down, noting that an official statement was coming shortly.
“I can confirm a restructure is happening … [but] The Kin Foundation is not shutting down, and the development of the Kin ecosystem will continue,” the spokesperson noted at the time.
BetaKit has since confirmed with the organizations that the current layoffs affect both Kik and the Kin Foundation. According to LinkedIn, Kik previously employed 213 people, with the Kin Foundation, which is registered as a Canadian nonprofit corporation but is headquartered in Tel Aviv, Israel, employing 77 people, with 70 based in Tel Aviv.
The SEC began investigating both Kik and the Kin Foundation in September 2017, after Kik officially launched Kin cryptocurrency. That September, the SEC sent Kik its first inquiry, and later a subpoena in January 2018. This subpoena was followed by eight more over the first half of 2018 and 10 testimonies, searching into both Kik and the Kin Foundation. However, in June, when the SEC officially filed its lawsuit, it dropped the investigation into the Kin Foundation, focusing solely in Kik and its ICO, which raised $157 million CAD. In May, Kik launched a “Defend Crypto” fund to take on the SEC, committing $5 million in Bitcoin, Ethereum, and Kin to fight its legal battle.
News of the layoffs follows Livingston’s previous public statements that he was confident Kik would win its SEC case.
“Importantly for developers, it is clear from the SEC’s lack of action against the Kin Foundation that the transactions currently taking place within the Kin Ecosystem do not fall under the federal securities laws,” he stated earlier this year.
“Despite these [recent] hard decisions my confidence in Kin only continues to grow,” Livingston said in Monday’s blog post. “Together we will show the power of the Kin Ecosystem. Together we will get millions of people to buy Kin to use it. And together we will build a new economy that offers equal opportunity to billions of people. Together we will win.”
With files from Isabelle Kirkwood
StartUp HERE Toronto is a publishing partner of Betakit and this article was originally published on their site.