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Federal Judge Rules that Kik’s 2017 Token Sale Violated US Securities Law
Before October 20, the parties have to file either a joint proposal for Kik’s investors, or a document with a proposal on how to proceed.
On Wednesday, a US federal judge ruled that Canadian social media and messaging app company Kik violated U.S. securities law back in 2017 when it raised $100 million via a token sale.
Alvin Hellerstein, a U.S. district judge for the Southern District of New York, said:
“Kik concedes that its issuance of Kin through the TDE involved an investment of money by which participants purchased or acquired Ether and exchanged Ether for Kin. Thus, the parties agree that the first element of the Howey test is satisfied. The parties dispute whether the second and third elements are satisfied. I hold that they are.”
According to Judge Hellerstein, Kik “extolled Kin’s profit-making potential,” satisfying one of the prongs, and “pooled proceeds from its sales of Kin in an effort to create an infrastructure for Kin, and thus boost the value of the investment.”
In response to the ruling, Kik CEO Ted Livingston stated:
“To be clear, Kik has always supported the Commission’s goal of protecting investors, and we take compliance seriously. In preparing for the sale of Kin, Kik retained sophisticated counsel (both in the United States and internationally) to analyze the law as we understood it, and we continue to believe that the public sale of Kin was that of a functional currency and not a sale of securities”.
Besides, Livingston promised the ruling would not have any impact on Kin token.
The Roots of the Legal Battle
It all started back in 2017 when Kik conducted an initial coin offering (ICO) for Kin tokens. As a result of the ICO, the company raised nearly $100 million. However, SEC called Kik token sale illegal. Besides, they claimed that Kik was selling their Kin tokens without registration for taxation.
In response, Kik claimed that its public offering was not a securities sale. Kik CEO Ted Livingston said that they have been preparing for such a situation. And to figure everything out, the company started preparing for the legal trial.
In September 2019, some stated Kik was shutting down because of the inability to battle against the SEC. However, Ted Livingston promised to do the best to allow the company to continue its existence.
Kik general counsel Eileen Lyon said:
“The SEC should engage in proper rulemaking, including the opportunity for public commentary, rather than force our industry to hunt for regulatory clues among the SEC’s conflicting statements, Commissioner and staff speeches, no-action letters, closed-door meetings with the SEC and nonprecedential settlements.”
Before October 20, the parties have to file either a joint proposal for Kik’s investors, or a document with a proposal on how to proceed.Business News, Cryptocurrency news, News, Startups, Token Sales
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