While Bitcoin may be in a bull market, not all companies associated with this industry have been in clear waters.
Kik Interactive, the Canadian technology giant behind the texting application that shares its name, is purportedly commencing a process of layoffs, issuing notices to dozens of members of its cryptocurrency division.
This move comes amidst Kik’s multi-month legal imbroglio with the U.S. Securities and Exchange Commission (SEC), which is centered around a digital asset that Kik sold via an initial coin offering, KIN.
Report: Kik to Layoff Much of Its Crypto Division
While Kik used to be one of the largest social applications, its dominance has waned over recent years due to the emergence of platforms like Snapchat, Telegram, and Facebook Messenger.
In fact, Israeli media outlet Calcalist reported that Kik is taking dramatic measures to try and bring stability to the company. Citing anonymous sources, Calcalist wrote that Kik’s flagship application, the Kik messenger, may soon be shut down.
That’s not all. The same sources say that the startup has forwarded layoff notices to 70 employees of its cryptocurrency division, Kin. It isn’t curtains closed for Kin, however, as management has purportedly provided a select set of employees with the option to “transfer to a new company that is based on the same technology” — whatever that means.
While the Calcalist didn’t state it outright, it seems that the 70 employees served with layoff notices were all the staff running the development and growth of Kin, meaning that things may be going south for the blockchain real quick.
As first spotted by The Block, the communications manager of the Kin Foundation has at least partially confirmed this news. Kevin Ricoy said that there is a “restructure” going on, adding that a company statement will soon be released on the intricacies of this move. Ricoy added that Kik and Kin are not dead in the water, asserting that the development of the “ecosystem will continue”.
Indeed, as this writer was about to finish composing this article, Kik’s chief executive, Ted Livingston confirmed the layoffs, writing that Kik will be slimmed down to an “elite 19-person team” that will be focusing on “converting Kin users into Kin buyers”.
While Livingstone is still optimistic, the market has been sensing some doubt and fear. On the day, the cryptocurrency is down some 18%, underperforming Bitcoin by around 15%.
Kik Fighting SEC Over ICO
As aforementioned, this move comes as Kik has been fighting the SEC.
For those unaware, in early-June, the SEC revealed that it would be suing Kik for breaking securities laws. Robert Cohen, the Chief of the Enforcement Division’s Cyber Unit, noted that as the firm explicitly told investors that they could make capital gains on their KIN tokens, the crypto assets could be classified as securities:
“Future profits based on the efforts of others is a hallmark of a securities offering that must comply with the federal securities laws.”
However, Kik fired back. In August, the technology firm issued a legal response that is over 100 pages long to rebut the SEC’s complaint.
😱 IT HAPPENED!!!!!:
Kik filed their answer to the SEC's complaint today and it's 100+ pages long and if you don't think I'm crazy enough to annotate ALL OF THE PAGES YOU'RE WRONG.
Happy reading + some thoughts from me 🙂https://t.co/4YcMfDlRSm
— Katherine Wu (@katherineykwu) August 7, 2019
While the piece is quite long, there are a few key takeaways put forth by Kik’s team of lawyers and technologists: Kik did not sell digital securities, and thus did not violate any pertinent federal laws; the crypto isn’t the firm’s attempt to save itself from going under; KIN isn’t the only company foraying into social media digital assets, but is the first; the SEC is ignoring certain statements that would help Kik’s case; the SEC is operating on a “flawed factual and legal premise”.