Kik Says SEC Lawsuit 'Twisted Facts' About Startup's $100 Million Token Sale

Kik claims the SEC took executives' comments out of context in a suit alleging the startup's 2017 token sale violated securities laws.

In a new filing, Kik - which raised $100 million from the sale - also said it has been looking at cryptocurrency since 2012, and did not use it as a last-minute pivot, as the SEC alleged.

Kik said the U.S. Securities and Exchange Commission manipulated facts and took comments out of context in the regulator's lawsuit against the startup over its 2017 token sale.

In the response, Kik's attorneys wrote that the SEC recognized its claim was weak and therefore created a "Highly selective and misleading" picture of the circumstances of the sale.

The SEC's complaint included a number of quotes from Kik board members and executives purporting to show that the company needed to conduct a token sale as a potential securities offering.

In its complaint, the SEC also said a consultant warned Kik that "The Kin offering was, potentially, an offering of securities that needed to be registered," but Kik's response says that this, too, was taken out of context.

Kik also emphasizes that it did not conduct a single sale for the Kin token, but rather two sales: a private SAFT and a public token sale.

While the SEC complaint claims that the Ontario Securities Commission warned Kik that kin might be a securities offering, the response claims that, as far as Kik is aware, the Canadian regulator did not make a final determination.

Kik has provided the SEC with more than 50,000 emails and 200 hours of filmed testimony as part of discovery, he said.

Kik has long said that the outcome of its fight with the SEC - regardless of whether kin is deemed to be a security or not - will result in increased clarity over token sales and how securities laws might apply.