Classification: SEC sued Kik for non-registered securities sales – What does that mean?
Home News arrangement: SEC sued Kik for non-registered securities sales – What does it mean?
Marcus Misiak –
A recently published document shows that the American stock exchange sued supervision, the Securities and Exchange Commission (SEC), Kik for involvement in a $ 100 million ICO in the year 2017. The SEC claims that the Token sale was illegal, because it is supposed to have a non-registered securities-sale of traded.
KiK is a Freeware Instant Messaging App from the canadian company KiK Interactive. Kik introduced its Initial Coin Offering (ICO) already in the year 2017, for his Kin-Token. The sale earned the company 100 million US dollars in cash and Ethereum. Within a few weeks after the ICO, the SEC issued regulations, indicating that ICOs illegal securities may present offers. KiK was part of the wave of subpoenas, sent by the SEC in the past year in crypto-projects.
According to a new SEC-Write the tokens-the offer section 5 of the Securities Act of 1933, a law that clearly States that all securities must be registered in the United States broke. Robert A. Chen, the head of the Cyber unit, said:
Kik told the investors that they could expect their efforts to create a digital Ecosystem gains. Future profits based on the efforts of others are a hallmark of a securities offering, it must comply with the Federal securities laws.
The press release briefly explained all the points of the Commission’s lawsuit against Kik Interactive. The Commission claims that Kik has for many years run in losses with its Messaging App, while the Management of the company, “predicted internally that in 2017 the money will run out”. Subsequently, the company collected by selling a trillion Kin-Token, $ 100 million. In the press release it says:
The suit claims that Kin-tokens were recently traded, with about half of the value of the public investors for the offer have been paid. The complaint also claims that Kik has marketed the Kin-Token as an investment opportunity.
In response, the Commission explained that Kik “allegedly told the investors”, that the value of the Tokens will rise with the demand, and promised at the same time, to lay the foundations for an increase in its demand. This includes the Integration of the Token in the Messaging App, the preparation of a TRANS-action Services and the introduction of a reward system, the company, in the use of the Token, it would stimulate include. The Commission also claims that the company had these services, as it offered the sale of this Token to investors, and adds that “there was nothing to buy, if you used Kin”.
Steven Peikin, the SEC Co-Director of the Division of Enforcement, explained that the Non-registration with the SEC “to investors and is legally entitled to the information withheld and prevented from informed investment decisions.”
Kik vs. the SEC
Already in may, complained to Ted Livingston, CEO of Kik that Kik had to spent 5 million US dollars for the negotiations with the SEC and the regulation would bring the authority before the court, if the securities would continue to operate the criminal prosecution against the company. In preparation for a possible lawsuit KiK started about a week ago a Crowdfunding campaign to get support for the fight against the SEC.
The campaign under the slogan “defend crypto” to ensure that. Their Website currencies supports donations in 16 different Crypto. The collected monies will form the basis for a legal dispute, to the regulatory authorities to change their criteria for the provision of securities according to the “Howey Test”. In this respect, the procedure could be leading the way for other ICOs and the crypto Space in General.
Kik has released the following statement to explain the Fundraising campaign:
After months of efforts to find a reasonable solution that was not Kin will be able to find a solution that would not affect the Kin project and all the others in the room difficult. So Kin will proceed in court against the SEC to ensure that there is a basis for future innovations.
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