The U.S. Securities and Exchange Commission has sued messaging app Kik over their 2017 ICO for its KIN token.
Steven Peikin, co-director of the SEC's Division of Enforcement that Kik "Deprived investors of information to which they were legally entitled, and prevented investors from making informed investment decisions."
According to the filing, Kik had been in a dire financial situation with its messaging app before deciding to pivot to a cryptocurrency project.
Kik decided to sell "Kin" tokens to fund the new venture, characterizing it as a utility token in spite of the fact that none of the services it promised had been built yet.
The offering included steep discounts for wealthy investors, with Kik promising that increased demand for Kin would correlate with greater value.
Kik deprived investors of information they were entitled to.
Kik was served with a "Wells Notice," by the SEC in November of 2018 after reviewing the facts behind Kik's ICO. In response, Kik issued their "Wells Response" in December, a 41-page document detailing Kik, their launch of the Kin token, and why they believe it does not represent a security.
Kik's defense stated that Kin represents a currency rather than a stock and because Kin holders have no direct interest in how Kik performs as a company.
This makes no sense because the utility of Kin depends on the Kik app, then Kin holders have plenty to worry about if Kik goes bankrupt.
Winning this has become a battle of "David vs. Goliath" in which Kik has characterized itself as having no choice but to take on the SEC. If it is determined that the 2017 ICO constituted a securities offering, then Kik did deprive investors of information by failing to register the offering.
SEC sues Kik for unregistered securities offering
Published on Jun 5, 2019
by Cryptoslate | Published on Coinage
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