Bitcoin company Vogogo announces termination of payment service, completely cutting off Coinbase's "financial path" in Canada

Cryptocurrency service provider Vogogo announced that it will stop all cryptocurrency transaction processing services starting next month. Experts said that Vogogo's move is likely to affect some Bitcoin service providers in the short term.

Vogogo officially announced the news on July 5, saying it would shut down its payment services after the risk management business under its name was officially transferred. Risk management and payment processing are Vogogo's main businesses. In August 2014, it received $8.5 million in financing with these two businesses.

The closure of Vogogo has dealt a heavy blow to the Canadian bitcoin market, which is already small and Vogogo is a major player in the market.

Even Coinbase’s services in the Canadian market rely on Vogogo. Therefore, after Vogogo terminated its services, it could only regretfully tell Canadian users that they could not use Coinbase for the time being.

Other exchanges active in Canada, such as Kraken and QuadrigaX, said their business would not be affected by the incident.

Vogogo has been in turmoil since April this year, with the company trying to find new sources of revenue by changing its business scope. It is said that its board of directors is facing a reshuffle and the company is also laying off employees to cut costs.

Chief Financial Officer Tom Wenz said in an interview that the company's other assets, such as electronic money institution (EMI) certificates, will create new revenue streams for it. He said the company is well-funded and will not face bankruptcy.

He believed that the payment business had very low profits, so he had the idea of ​​terminating the service.

There was little interest in the payments business, we had fewer customers, and our revenue was falling. We didn’t need to keep losing money, so the easiest option was to terminate the payments business.

Impact on Bitcoin Services

Coinbase wrote an email to its Canadian users. The email stated that with the termination of Vogogo's payment service, Coinbase's transfer and currency conversion services will also be temporarily suspended. And notified users to transfer all funds on the platform before July 29.

Coinbase told CoinDesk that it is currently working to restore service in the Canadian market. We are currently developing emergency response measures and hope to restore service in the Canadian market as soon as possible.

Bitcoin service provider Celery said that since it partnered with Vogogo in 2015, 10% of its business has come from Canada. Celery has not yet provided solutions to Canadian customers. Celery founder Ilya Subkhankulov said that there are few Bitcoin companies in Canada and the economy is not good, so it is too difficult to find a company to replace Vogogo. The Canadian payment processing market is not well developed because the entire payment network is controlled by a few banks.

Kraken CEO Jesse Powel said that although Vogogo is one of the top cryptocurrency transaction processors in Canada, they already have a response plan. In an emergency, we do not want to affect our customers.

Multiple factors

Wenz said the closure of the payment business foreshadows Vogogo's transformation and upgrading. They don't want to continue to lose money.

Vogogo has undergone significant changes in the past few months. In May, news of a board reshuffle was announced. A month later, Chairman and CEO Geoff Gordon announced his resignation on June 24. Its Chief Revenue Officer Rodney Thompson will resign on July 16. Wenz himself will also resign from the board on July 10.

In addition to the issues of revenue and market attractiveness, Wenz also mentioned the company's stock price. According to Bloomberg data, the company's stock price was about 2 Canadian dollars in July last year. Now the stock price has fallen by 90% to only 0.12 Canadian dollars. Vogogo's stock price has fully demonstrated our wrong business model. In order not to go further down the wrong path, we chose to expand other businesses.