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Coinbase ceasing Canadian operations due to Vogogo closure

CoinGuyCoinGuy Administrator
edited June 1 in Bitcoin News
Just got this email, so I guess the Vogogo closure impact has begun

As of August 1, Coinbase's Canadian payments provider, Vogogo, will be shutting down its payment processing business. When this occurs, Coinbase will no longer be able to support Canadian EFT transfers, Interac transfers, or the storage of customer CAD on Coinbase.

All customer CAD stored with Coinbase MUST be withdrawn off site or converted to digital currency by July 29th.

If you hold CAD in your Coinbase account, you must liquidate your CAD holdings before July 29th by either:

-creating a withdrawal to your linked bank account or
-exchanging stored CAD for digital currency.

If you are unable to withdraw or exchange your CAD before July 29th, Coinbase will suspend your account and significant fees will be incurred for CAD withdrawals.

We are disappointed to lose the ability to offer these payment methods for our Canadian customers and hope to provide additional payment methods in the future. We appreciate your support during this change.
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Comments

  • KashiKashi Member
    Since Coinbase will no longer be supporting Canadian users, would Blockchain be a good alternative?
  • CoinGuyCoinGuy Administrator
    @kashi actually Quadrigacx or Taurus would be better -- Blockchain is not an exchange.
  • That's bad news ... Wonder what motivated them in doing so.
  • nikotine32nikotine32 Member
    edited March 16
    What we know from public sources is that the company had initially focused on payment processing and risk management for online casino operators. In early 2014, it changed its focus to service Bitcoin exchanges, signing up 2 exchanges initially with revenues of CAD $50,000 per quarter. A few months later it received $12M of venture capital funding to expand its services outside of Canada, had its IPO, and signed up a string of small and major exchanges (although we now know that some exchanges stopped using the services after some period of time, such as QuadrigaCX and Taurus).

    Despite these apparent successes, its operations were bleeding money. For example, I checked the company's financial statements and in 2016Q1 its revenues were $160,000, its expenses $2.5M, with net losses of $2.3M:
    https://www.google.ca/finance?q=CVE:VGO&fstype=ii&ei=S3a7VfD0PJH9etLCthg

    In the most recent announcement, Vogogo's CFO said that the payment business wasn’t making enough money to keep it afloat, and that ultimately, the company opted, in a decision he said was made Monday, to close it down. "The payment business, there wasn’t a lot of interest in it. There wasn’t a lot of revenue or customers there. So, the simplest way to preserve cash value to the organization was just to shut that piece down."

    BitFrank (Satoshi Counter) commented on another forum on the difficulty of maintaining a bank account a few days ago: "The problem with exchanges is rampant fraud with Interac online, and problem with brokers is lack of liquidity on Bitcoin exchanges. Banks in Canada are hitting bitcoin businesses very hard, so it's been rather difficult for us to offer low-cost bitcoin solutions. Vogogo charged like $10 000 of fees minimum per month, that's why only Coinbase and Kraken were using them."

    It appears that by offering facilitation of payments and enabling multiple funding options Vogogo was filling a void for those exchanges. It is generally known that Canadian banks, with perhaps a few exceptions, are not very Bitcoin-friendly.

    I wonder how we should interpret Vogogo's failure. They have signed up many exchanges, including a few majors such as Coinbase, Bitmex, and Bitstamp, yet Vogogo's revenues were insufficient to cover their expenses.

    Why could Vogogo not raise the price of their services to a point that their revenues cover the cost of their services?

    Is Vogogo's failure is a sign that in the short and medium term there is no longer any place for payment processors to act as "middle men" between banks and exchanges? For example, some exchanges in Canada deal with banks directly and are using payment processors.
  • MikeXBTMikeXBT Member Plus
    They are allowing CC/DC based brokerage purchase of bitcoins, not trading or sales.
  • You guys are right about the limitations of the Coinbase new "offering". I don't think we can consider that Coinbase has fully restored services to Canadian users since the Vogogo shutdown last month... we are still unable to fund using our Canadian bank accounts.

    To get started, visit the "Trade" page on Coinbase.com or tap on the "Buy" or "Sell" options in our iOS or Android apps to add a credit or debit card and buy digital currency. Please note that at this time users in Canada can only buy digital currency. We hope to add the ability to sell digital currency in Canada as well soon.

    https://blog.coinbase.com/2016/07/28/instantly-buy-canada-singapore/
  • BTW guys, any news from Kraken about them restoring funding to Canadians? I recall that at the moment that they announced that funding would no longer be offered, they also mentioned that this is a temporary interruption and the they are already working on alternative solutions.

    Anyone heard anything from Kraken since then?
  • nikotine32nikotine32 Member
    edited March 16
    I just checked my Kraken account and I see something a bit unexpected. In the Deposit menu I still see that Canadian Funding is available and Vogogo options are still available.

    Deposit Canadian Dollar (CAD)

    - Wire Transfer Deposit • Vogogo (EFT)
    - Wire Transfer Deposit • Vogogo (INTERAC)

    Does this means that Vogogo funding is still available? Or is it simply that Kraken did not update its system yet?
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