(CNN) — At its peak, Kik’s messaging app had hundreds of millions of registered users and the company earned a private market valuation of $1 billion, placing it in the elite ranks of tech unicorns. Now, Kik is shutting down its chat app after a fight with regulators.
Kik Interactive announced late Monday that it’s shuttering the messenger app and cutting its staff from over 100 people to just 19 employees. The company will focus its remaining resources entirely on growing its cryptocurrency, Kin, the subject of a recent lawsuit filed by the Securities and Exchange Commission.
The SEC sued Kik in June for raising about $100 million in an ICO, or initial coin offering, without properly registering the offering.
In a blog post Monday, Kik CEO and founder Ted Livingston said the legal battle with the SEC has been “a long and expensive process to drain our resources.”
The SEC declined to comment for this story. Kik Interactive did not respond to a request for comment on when the app would shut down.
Launched in 2010, Kik pulled in a wide swath of users with the promise of being able to chat anonymously. Users were not required to register with a phone number or other personal details. In 2015, the app received $50 million in funding from Chinese tech giant Tencent.
It grew alongside other popular messaging apps, including WhatsApp, Facebook Messenger, Telegram and Line, but the anonymity feature became a double-edged sword. Headlines appeared on how child predators contacted minors through the app and the anonymity feature hurt law enforcement’s ability to track criminals.
As of 2016, Kik had 300 million registered users. It no longer breaks out its number of active users.
Livingston said the changes would cut the company’s burn rate by 85% and put it “in position to get through the SEC trial with the resources we have.”
The SEC has been cracking down on initial coin offerings over the past two years. In comments in a Senate banking committee hearing in February 2018, SEC chairman Jay Clayton said that those raising ICOs were “in the crosshairs of our enforcement provision.”
“Many ICOs are being conducted illegally,” said Clayton at the time. “Folks somehow got comfortable that this was new and it was okay and it was not a security, it was just some other way to raise money.”
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