Canadian Bitcoin Payment Processor to Shut Down Payments Operations

Bitcoin services startup Vogogo has decided to shut down its cryptocurrency payment processing business after it lost popularity. Some executives resigned during the period, and there are reports that at least some of its bitcoin business will be affected in the near future. Vogogo announced on July 5 that its payment business will also be shut down after the sale of its risk management business. The two businesses are Vogogo's main businesses and helped the company raise $85 million in venture funds before going public in August 2014. The closure has attracted widespread attention because Canada's bitcoin industry is extremely small and Vogogo provides these services. Vogogo is also affected by the closure of its payment processing business because Coinbase is the payment processor in the Canadian market. Coinbase notified Canadian customers that it will no longer be able to provide these services after the end of this month. Other Canadian exchanges such as Kraken and QuadrigaX said they were not affected. Vogogo has been exploring new directions and new revenues since the company announced in April that its board was developing new businesses. The company said it would downsize to cut costs. Chief Financial Officer Tom Wenz said in an interview that the company’s remaining assets, including an electronic money institution license issued last fall, are sources of revenue. He said the company has a lot of money in the bank and is not going to go bankrupt. He also said the company decided to shut down the payments business on Monday because it was not generating enough revenue and was struggling to survive. “The payments business was not generating significant revenue or a lot of customers, so the easiest way for the company to preserve the value of the currency was to shut it down,” Wenz told CoinDesk. Impact on Bitcoin Business Coinbase’s email to Canadian customers, which received widespread attention on social media, said it could no longer provide those customers with electronic funds transfers or online money transfers, and would no longer provide Canadian dollar-denominated funds storage services. The email said those customers’ deposits needed to be withdrawn by July 29. Coinbase later told CoinDesk that it was working to resume business with Canadian customers in light of Vogogo’s closure of payment processing. "We will adapt to this change as quickly as possible and hope to resume business with our Canadian customers in a timely manner," the company said. Bitcoin service Celery said that Canada accounts for 10% of its business since its merger with Vogogo in 2015, but it has not yet notified customers of the change. Celery founder Ilya Subkhankulov revealed that the change will have little impact on Canadian bitcoin companies given the current financial environment. He said: "The Canadian payment processing market is difficult to handle digital currency transactions because only a few banks have strict control over payment networks." Kraken CEO Jesse Powell said that Vogogo is the company's main Canadian dollar processor and trading services will be changed accordingly due to the closure of its payment business. Powell told CoinDesk, "At this time, we do not want our customers to be affected." Wenz's decision to close the payment processor for many reasons and the company's overall strategic shift are all to avoid hindering the business model. In the past few months, major changes have taken place within the company. In May, the board of directors established an internal organization responsible for exploring new directions. Less than a month later, Vogogo announced that President and CEO Geoff Gordon would resign on June 24 and resign from the board on July 10. On July 16, Vogogo announced that Rodney Thompson had resigned from his position as chief revenue officer, and from the end of the month, Wenz's job would become part-time. Wenz pointed out that in addition to issues of revenue and market attractiveness, the company's stock was also one of the reasons. According to Bloomberg data, Vogogo's stock price was close to 2 Canadian dollars in July last year, and fell more than 90% in the following 12 months, finally maintaining at about 12 Canadian cents. "Judging from the stock price, the current business model is not very hot." He said, "Instead of investing money in an unpopular business, we might as well look for other options."