Kik, a Canada-based messaging app developer backed by internet group Tencent, is shutting down its eponymous messenger platform and letting go of 70 employees, Calcalist reported on Monday.
Ted Livingston, founder and chief executive of Kin, confirmed the news in a blog post yesterday, noting that the decision was made due to a costly court battle with US regulator the Securities and Exchange Commission (SEC).
The lawsuit, filed by SEC in June 2019, alleges that Kik’s $98m initial coin offering (ICO) in 2017 was illegal. The regulator has insisted Kik label its cryptocurrency, Kin, a security, which Livingston argued would remove its usability and “set a dangerous precedent for the industry”.
Founded in 2009, Kik launched a messaging app of the same name the following year. At its peak in 2016, the app had 300 million users and Livingston noted in his blog post that its popularity had recently begun to grow again.
The SEC alleges the ICO was meant to fund the further development of Kik but that this was not disclosed to investors, meaning the company “deprived investors of information to which they were legally entitled”. A total of $55m of tokens were issued to US investors.
The 70 members of staff who have been made redundant comprise the members of Kik’s Israel-based subsidiary which was working on Kin. They have reportedly been offered positions with another firm in the same sector, and Kik currently retains a total of 19 employees.
Kik has disclosed approximately $116m in funding altogether. It most recently secured $50m from Tencent at a $1bn valuation in 2015.
The company’s earlier investors include RRE Ventures, Spark Capital, Union Square Ventures, Foundation Capital, Valiant Capital Partners, Millennium Technology Value Partners, SV Angel and Golden Triangle Angel Network.
