Despite Early Disappointments, Vogogo Embraces Cryptocurrency Businesses and Finds Success

Founded in early 2008, Vogogo originally derived its business from companies in the online poker industry, developing its risk mitigation and payment processing expertise. Some of the biggest names in the online gaming industry were amongst the company’s first customers. “Vogogo has spent recent years developing and launching risk management and payment processing technologies that enable secure and compliant transaction processing between businesses and their customers, utilizing conventional banking and payment networks.”

The company is a publicly traded risk management and electronic payment processor headquartered in Calgary, Canada. Their shares trade on the Canadian TSX Venture Exchange (TSXV) under the trading symbol “VGO,” and despite getting started completely outside of the cryptocurrency world, the company has recently revealed plans to focus on expansion into the cryptocurrency market.

“We are seeing significant interest in our risk management services and payment services from alternative markets. Capturing those opportunities will help us drive revenue while we continue to move forward with our plan to be the dominant provider of risk management and payment processing services to the cryptocurrency industry.”
— – Vogogo

The startup wears a few different hats in the payment technology space, including AML/KYC compliance reporting, payment processing, fraud mitigation, and API integration. In a nutshell, they are a one-stop shop for business payments, risk management, and regulatory compliance.

“Vogogo remains primarily focused on providing compliant risk management, payment and pre-paid services to the new and emerging cryptocurrency market. Management believes that businesses developing and offering services based on cryptocurrencies or blockchain technologies are poised to significantly disrupt conventional financial services on a global scale.”
— – Vogogo

While Vogogo was not initially formed to work with cryptocurrencies and the businesses that deal in them, after a rocky start the company has been swiftly gaining traction. During 2014 the company earned a large percentage of its revenues from just two large cryptocurrency clients.

“We are huge believers in block-chain technologies and we aim to play a significant role in anchoring that industry for a long time to come.”
— – Vogogo

In Q2 2014, Vogogo’s revenue was $68,767, which dropped 66% to $23,638 in a year. Similarly, the $188,896 revenue for the six month period ended June 30, 2014 also dropped 74% to $48,644 this year.

“Since the Corporation’s current revenue source is highly dependent on electronic currency exchanges (specifically, BitCoin exchanges), the regulatory and acceptance risks of such electronic currencies could have a material impact on the Corporation’s business.”
— – Vogogo

The company cited that one of the cryptocurrency merchants “lost its commercial banking” and the second “may have encountered financial difficulties, specifically around cash flows.” Learning from their experience, Vogogo’s management decided to stop adding customers, “in order to adjust the Vogogo Technology.”

The setback didn’t last long. Vogogo completed the core adjustments to its software and started bringing on new customers in the cryptocurrency space.

In September 2014, the company announced it’s platform would be used by CoinTrader, a leading North American Bitcoin exchange, and one of the top three Bitcoin exchanges in Canada by volume.

“We are thrilled to be working with Vogogo. Their platform gives us the ability to offer our customers a fast, secure, and incredibly simple payment option.” – Jackson Warren, CoinTrader Co-founder

In the same month, Vogogo also onboarded Florida-based US cryptocurrency exchange Cryptsy, which services 200 different types of cryptocurrencies and is the world’s largest altcoin exchange.

Expanding outside of the North America, in December 2014, the Company entered into agreements with cryptocurrency exchanges Mega Idea Holdings Limited (ANXPro) of China and The Rock Trading Company of Malta.

“One of the critical roles we play is to lower the barriers to Bitcoins and other cryptocurrencies by increasing ways for consumers to acquire and access crypto currencies. Integrating Vogogo with the series of platforms we have enables us to extend our services to local communities across the U.S. and Canada.”
— – Ken Lo, CEO of ANX

Vogogo also signed contracts with Vancouver-based cryptocurrency exchange QuadrigaCX and Hong Kong-based BitMEX, the only centrally-cleared Bitcoin derivatives exchange.

The company picked up the pace In the new year, adding many more cryptocurrency clients to its portfolio. Canadian cryptocurrency exchanges Bitcoin Brains, Vancouver-based Taurus Exchange, and Canada’s first and largest bitcoin exchange, CAVirtex were all added.

A partnership with the acquiring division of UK based eMerchantPay Limited – E-comprocessing followed shortly after. This partnership would enable Vogogo to fully expand its risk management and payment processing platform to the European market. In the same month, Vogogo also announced a technical integration with the now defunct US-based Bitcoin platform Harborly.

During the second quarter of 2015 the company announced the addition of four leading cryptocurrency companies, while listing only one non-cryptocurrency merchant.

Then the “big leagues” of bitcoin’s largest businesses started to hop on board too. Global bitcoin payment service provider BitPay, micropayment leader ChangeTip, institutional trading firm Genesis Global Trading, Bitcoin exchanges Kraken and Bitstamp, and Canadian-Filipino remittance provider Zinger were all added to Vogogo’s client list.

Vogogo then saw a way to help Bitstamp across multiple countries by “actively supporting Bitstamp’s expansion into the U.S. and Canadian markets, as well as enhancing the exchange’s European service offerings.” The next month, Vogogo announced a partnership with Kraken.

Although Q3 was relatively quiet, on Monday the company announced that it had landed the biggest fish in the sea, Coinbase.

The recent integration between Vogogo and the major cryptocurrency companies shows that an increasing number of the latter are getting more serious about compliance and risk mitigation.

“Due to industry trends, Vogogo has increasingly focused on its risk management services, providing fully automated risk management services including fraud mitigation, Know Your Customer (“KYC”), sanctions checks and Anti-Money Laundering – Counter Terrorist Financing (“AML-CTF”) processes and procedures, combined with a bundled suite of payment services.”
— – Vogogo

Regulatory requirements are numerous, but most cryptocurrency startups are not equipped to comply. Vogogo management constantly monitors cryptocurrency regulations and is working with key clients in enabling them to comply with these regulations.

FinCen rules that bitcoin processors and exchanges may be considered money services businesses under US law.

“Virtual currency exchangers must bring products to market that comply with our anti-money-laundering laws. Innovation is laudable, but only as long as it does not unreasonably expose our financial system to tech-smart criminals eager to abuse the latest and most complex products.”
— – FinCEN director Jennifer Shasky Calvery

In March 2014, the Monetary Authority of Singapore (MAS) announced that it would regulate virtual currency intermediaries, to address potential Money Laundering and Terrorist Financing (ML/TF) risks.

“The ability for the global crypto industry to meet the stringent requirements of regulators and traditional banks is one of the most significant challenges for the crypto space. – Geoff Gordon, Vogogo Founder and CEO

The difficulty in acquiring similar services through traditional banks and financial institutions helps Vogogo’s business. The company reported that it was seeing more companies in need of compliance and risk mitigation services.

Vogogo’s management states that the company has the “risk management and regulatory knowledge, technology, banking relationships, and operational experience to effectively service the cryptocurrency industry”. With Vogogo’s products, the company feels that cryptocurrency businesses can offer their end users “convenient and efficient methods of getting funds into and out of the cryptocurrency ecosystem(s),” a critical element for the blockchain technology to gain mass adoption.