SEC Blasts Kik's 'Void for Vagueness' Defense of 2017 ICO

A discovery motion filed Monday further raised the stakes, following the SEC's 49-page filing Friday - the latest play in a legal chess match with sweeping potential ramifications for tokens and securities law, and one seeking, more specifically, to determine whether Kik's 2017 ICO was lawful.

Kik has bet the farm on a "Void for vagueness" affirmative defense, and wants to depose high-ranking SEC officials to prove the regulator was not in a position in 2017 to give clear guidance on token sales.

"Kik is obviously using the void for vagueness defense as a way to try to peek behind the curtain at the SEC to figure out if the SEC really had a plan all along."

The SEC argued in the same discovery motion that Kik's affirmative defense is without legal merit.

It drives into decades of legal wrangling over what constitutes an "Investment contract." Kik claims vagueness precludes it from applying to their sale; the SEC says just the opposite.

Therefore: it falls under the scope of the SEC. In its June complaint kicking off this legal saga, the SEC argued Kik's 2017 ICO was an investment contract sale and therefore fell under agency's remit to regulate.

In Kik's August defense they argued that they did not have "Adequate notice" that the SEC would consider Kin an "Investment contract."

The DAO Report was released in July 2017 - two months prior to Kik's September 2017 ICO - setting the ground rules for on-chain investment contracts and thus "Provided Kik constitutionally sufficient notice to Kik that the Offering and Sale might violate the Securities Act.".

It took years for the SEC to pursue action against token sales, Kik argues, saying the wild west ICOs of 2016 and 2017 "Contributed to the confusion" of this case.

Kik's strategy is to force a lengthy discovery process with depositions from a range of SEC officials; they argue that documents, and depositions, are relevant to their void for vagueness affirmative defense.