2019-1-29 15:29 |
Kik Interactive Inc., a social media startup based in Waterloo, Ontario is planning to fight the Securities and Exchange Commission (SEC) in court.
The startup’s 2017 initial coin offering is at the center of the controversy, as reported by the Wall Street Journal.
An Effort to Protect Digital CurrenciesThe enforcement division of the SEC believes that Kik’s initial coin offering for its crypto called “KIN” which brought in $100 million for the startup, was an unregistered security token.
The company’s chief Ted Livingston told the Wall Street Journal that they are planning to contest that view in court.
The SEC has not commented on the matter yet.
Kik is claiming that KIN is not an unregistered security, rather a digital token that works like a currency on its social platform.
They suggest that tokens are a new type of assets that cannot be subjected to the same rules as traditional stocks and bonds.
The upcoming court battle could influence the future of digital currencies and the SEC’s authority to regulate them.
Note that the ICO industry is infamous for numerous scams even though it gave rise to several startups with good potential.
The ICO market has raised over $20 billion in funding since 2014.
What Does the SEC Suggest?The securities regulator in the US is targeting several token issuers, but no judgment has been made on whether ICOs should be classified as securities offerings or not yet by a civil judge.
If the agency loses the case, it will hamper its ability to curb fraudulent offerings in the market.
Livingston says that Kik hasn’t been accused of fraud by the SEC.
Instead, it’s that their enforcement division believes that the company failed to register it with the SEC and therefore withheld information from the investors.
It is not known whether enforcement action has been approved yet by the SEC’s commissioners, which is a must in this case.
Livingston states that KIN is a way to monetize the Kik platform as it allows developers and users to earn crypto by completing tasks or building apps.
One trillion of the total 10 trillion available KIN tokens were available during the public sale.
Six trillion KIN tokens were given to a new nonprofit foundation while the company retained three trillion.
Kik suggests that KIN was marketed as a utility token, not a security.
Canadian Startup Kik Plans to Fight a Legal Battle Against the SEC Over an ICO Case was originally found on Cryptocurrency News | Blockchain News | Bitcoin News | blokt.com.
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