A newly released document shows the U.S. Securities and Exchange Commission is suing Kik for holding a $100 million dollar ICO in 2017.
SEC Claims $100 Million Token Sale was Illegal
An SEC filing from June 4 shows that the U.S. Securities and Exchange Commission (SEC) is suing Kik for what it considers to be unregistered securities offering.
Kik held its initial coin offering (ICO) for its Kin token in 2017 and the sale raised $100 million. According to the SEC filing, the token offering broke Section 5 of the Securities Act of 1933, a statute which clearly states that all securities offerings must be registered.
Steven Peikin, the SEC co-director of the Division of Enforcement, explained that Kik’s failure to register with the SEC:
deprived investors of information to which they were legally entitled, and prevented investors from making informed investment decisions.
Peikin also said that “companies do not face a binary choice between innovation and compliance with the federal securities laws.”
Kik Raised Funds to Save a Sinking Ship
According to the agency, Kik attempted re-invent its business model after losing money for years on its messaging application and the SEC took issue with the fact that recently traded Kin tokens traded for nearly 50% of the value investors paid during the ICO. The SEC also alleges that Kik executives believed the company would go out of business unless an ICO was held.
Previously the Ontario Securities Commission had also informed Kik that its Kin token could be classified as a security. To date, the SEC’s suit against Kik is the largest since the ICO boom and the litigation should come as no surprise to Kik as the SEC has explicitly stated that it will pursue unregistered securities sales held in 2017.
In May, Kik CEO Ted Livingston complained that Kik had spent $5 million dealing with the SEC and would take the regulator to court if the securities watchdog persisted in pursuing law enforcement against the company. Those interested in the nitty gritty concerning the suit can read the original filing here.
This is a developing story which will be updated as new information becomes available.
Do you think the SEC will force the ICO to refund $100 million? Share your thoughts in the comments below!
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Check out the original article here.
Author: Eustace Cryptus