Kik, the Canadian software company published a 130-pages long filing as a response to the U.S. Securities and Exchange Commission (SEC)’s litigation of considering Kik’s ICO as an unregistered securities offering.
Major points in the case since 2017
- 2017 – Kik completes its $100 million Initial Coin Offering (ICO) sale for Kin token (its native token)
- November 2018 – US SEC proposes enforcement action against Kik and the whole Kin ecosystem
- January 2019 – Kik plans to fight back against US SEC’s proposed enforcement action
- May 2019 – Kik announces “DefendCrypto” campaign to allocate $5 million to fund a lawsuit against the US SEC
- June 2019 – US SEC sues Kik, alleging that it offers unregistered securities in the form of its native token, Kin
- August 2019 – Kik claims that SEC is repeatedly “twisting the facts of the case”.
It’s been over 18 months since SEC began investigating the matter of the Kik’s 2017 ICO. On August 06, 2019, Kik posted a 130 –pages long filing detailing the rebuttal of the SEC’s arguments. In the document, it also denies the core allegation that the company conducted an unregistered securities offering.
“SEC Twisting the Facts of the Case” – Kik
Kik, in the initial pages of the document, claims that SEC employed a “strategy to twist the facts”. It asserts that the SEC twisted the matter to create a “highly selective and misleading depiction of the record”. Kik also provided a few examples of how and where SEC employed a different approach in this case for its narrative purposes. According to CEO Ted Livingston, SEC was playing dirty when it sued Kik in June. He said that they did so to simply make Kin token look bad. He went on to say;
“What surprised us is just what lengths the SEC went to twist the facts. They cut quotes and [took them out of context] and that’s something we didn’t expect from the SEC.”
It’s worth noting that Kin was designed as an “in-app token” to buy games, digital products, and other services in the Kik Messenger itself. SEC claims that Kik didn’t register their offering and henceforth the sale of tokens from Kik to US investors was illegal.
In response to the allegation of the Kin token being security, Kik’s general counsel Eileen Lyon said in a press release;
“since Kin is not itself security, the SEC must show that it was sold in a way that violates the securities laws. The SEC had access to over 50,000 documents and took testimony from nearly 20 witnesses before filing its Complaint, yet it is unable to make the case that Kik’s token sale violated the securities laws without bending the facts to distort the record.”
The company’s CEO Ted Livingston also alleged that the “SEC tries to paint a picture”. He stated –
“The SEC tries to paint a picture that the Kin project was an act of desperation rather than the bold move that it was to win the game, and one that Kakao, Line, Telegram, and Facebook have all now followed.”
As for now, Kik v/s SEC is an ongoing matter. Kik is of the view that the outcomes of its fight with SEC will provide increased clarity on token sales and securities laws in the US.