Kik is going to court against SEC decision on their ICO

27 Jan, 2019
by Arthur Sillers
Kik is going to court against SEC decision on their ICO

ICO’s have been hit hard through the end of last year, with legal common practice increasingly becoming to declare them securities under the purview of the SEC, but Kik, the Canadian social media and messaging app company is fighting it’s ICO’s designation in court in an effort to stave off regulation of its Kin cryptotoken.

Kik is a hugely popular messaging application which entered the world of cryptocurrency in 2017 with a $100 Million ICO, one of the largest of that year. Since then, ICOs have entered a more precarious legal status, with a dearth of legal precedent indicating that the SEC is willing to enforce securities regulation on a large portion of them. This includes Kik’s token Kin, which the SEC explicitly considers an unregistered security token.

According to the Wall Street Journal, Kik is preparing to fight this designation in court, creating a legal conflict which could have significant ramifications for the near future of ICOs and crypto at large.

Read more: UK securities regulator rejects the SEC's test for utility tokens

 Ted Livingston, the CEO of Kik, told the WSJ that tokens like Kin are in fact not securities, but a brand new category of assets, and as such should not be subject to the regulation that is usually elicited for stocks, bonds, and other securities. Levingston, following the lead many crypto developers, classifies his token ‘Kin’ as a ‘utility token’ which is a different beast than securities and therefore does not need to be registered with the SEC. The argument comes down to the fact that while investors may potentially make money from Kin, which monetizes the Kik app, they aren’t led to believe that Kin is a vehicle for investing and making profit in and of itself.

Read more: Canadian messaging app Kik releases first product after successful ICO

Many companies have been receiving subpoenas from the SEC, and most have stepped down to avoid risking backlash from the agency. The fact that Kik is deciding to push back will more clearly define what role the SEC has in regulating ICOs and cryptocurrencies as a whole. The SEC has not had clear guidelines from higher litigators on how they should approach ICOs and crypto generally.

Read more: Former US congressman criticizes SEC approach to cryptocurrency

The SEC's approach has been to enforce subpoena's piecemeal, one by one, in an attempt to keep potential security violations in line without defining their exact position on what cryptocurrency is or isn't a security, which they are not legally allowed to define. If Kik wins in their courtcase, the SEC will likely lose a lot of their significance in the regulation of crypto as a whole.

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Read more about: Kin (KIN)


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