SEC calls on court to expedite Kik Interactive ICO

The U.S. Securities and Exchange Commission (SEC) urged the court to expedite the case against the CanadianKik Interactive, accused of conducting an unregistered ICO.

In his appeal to the District Court of the Southern DistrictNew York SEC said that Kik Interactive did not provide adequate arguments why KIN tokens were not registered as securities. Let's remember that in 2017, Kik held an initial coin offering (ICO), which raised about $100 million.

The agency claims that Kik sold tokensinvestors, promising them profits as the ecosystem expands, which is considered a key characteristic of a security offering. In its motion, the SEC quoted Kik CEO Ted Livingstone as saying that "the price of the KIN token is likely to increase in value." This “investment scheme,” according to federal laws, makes the token a security.

According to Kik's arguments, the tokens on the preliminaryThe sale was intended exclusively for accredited investors to raise funds for the development of the KIN ecosystem. Then, a public sale of tokens was conducted, aimed at ordinary users. However, the regulator refutes these arguments, since the startup did not present any differences, how these two rounds of sales differed from each other. In addition, restrictions on the sale of KIN tokens on the open market did not apply to accredited investors.

Despite Kik claims that the ICOis beyond the powers of the Commission, the agency is convinced of the opposite, because tokens were sold to US citizens. Kik assures that it has fulfilled all the requirements necessary for the legitimate attraction of funds, namely, before conducting a pre-sale, it filled out a special form, exempting from the need to register with the SEC.

As for the open sale, Kik deniesthe presence of any contractual obligations and promises to investors. Kik management maintains that, as defined by the Commodity Futures Trading Commission (CFTC) and the Internal Revenue Service (IRS), KIN tokens are not securities, but consumer goods. Moreover, Kik believes that the SEC is asking the court to expand its powers without understanding the status of KIN tokens and key aspects of their sale.

Last May, Livingston announced the creation of a new fund, DefendCrypto, to cover legal costs in the SEC case, and also stated that negotiations with the SEC cost him $5 million.

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