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Kik Interactive Inc., a messaging service, responded to the enforcement actions taken against it by the U.S. Securities and Exchange Commission [SEC]. In a press release, Chief Executive Officer of Kik, Ted Livingston, said that they had been expecting this and now, they “welcome the opportunity to fight for the future of crypto.”
The CEO further added,
“We hope this case will make it clear that the securities laws should not be applied to a currency used by millions of people in dozens of apps.”
Kin token was launched in 2017, and has been adopted by various apps since, with such apps being popular among people. Livingston claimed that by the time of the trial, Kin token would be the most widely used crypto in the world. He added that the SEC’s actions would stand as a challenge, but it would not impact the use, transferability, and characterization of Kin.
The company further defended itself by saying that the SEC’s complaint against it was “based on a flawed legal theory.” Eileen Lyon, Kik’s General Counsel, listed the issues with SEC’s complaint and how they used the Howey Test “beyond its definition.”
“Among other things, the complaint assumes, incorrectly, that any discussion of a potential increase in value of an asset is the same as offering or promising profits solely from the efforts of another; that having aligned incentives is the same as creating a ‘common enterprise’; and that any contributions by a seller or promoter are necessarily the “essential” managerial or entrepreneurial efforts required to create an investment contract. These legal assumptions stretch the Howey test well beyond its definition, and we do not believe they will withstand judicial scrutiny.”
She further noted that the Wells Notice received in November 2018 was addressed to both Kik and the Kin Foundation. However, after reading the company’s Wells Notice, SEC decided to not name the Kin Foundation. Along with this, the SEC did not assert any claims based on Kin transactions that took place post the company’s 2017 pre-sale and token distribution.
“In our view, the SEC’s decision not to bring such claims acknowledges that the transactions currently taking place within the Kin Ecosystem do not fall under the federal securities laws.”
Even though the CEO claims that the SEC’s claims against the company present only a selective and misleading picture, it is expected that the whole story will soon be presented in court.
Apart from Kin, there are many other cryptocurrencies fighting to being considered as a security. Kin’s case may speed things up for such cryptos.