Australia crushes on Fraudulent and Deceptive ICO

Australia’s financial regulator is repressing on misleading initial coin offerings (ICOs), referring on “a serious breach of the Australian law”
03 May 2018   857232

In the result of the regulator’s requests, some issuers have stopped their token sales or are updating their structures. On Tuesday the Australian Securities and Investments Commission (ASIC) declared  that it is taking measures “on misleading or deceptive conduct in the marketing and selling of digital or virtual tokens via initial coin offerings (ICOs).” ASIC is an independent Australian governmental structure that conducts as the country’s corporate regulator.

ASIC is issuing inquiries to ICO issuers and their advisers where we identify conduct or statements that may be misleading or deceptive. This is in addition to our inquiries where we identify potentially unlicensed conduct. As a result of our inquiries, some issuers have halted their ICOs or have indicated the ICO structure will be modified.
(The Australian Securities and Investments Commission)

ASIC has also refreshed its information sheet on ICOs and cryptocurrency which defines “misleading or deceptive conduct.”

If you are acting with someone else’s money, or selling something to someone, you have obligations. Regardless of the structure of the ICO, there is one law that will always apply: you cannot make misleading or deceptive statements about the product. This is going to be a key focus for us as this sector develops. 
John Price, 
Commissioner, ASIC

The Commission presented 4 examples of what this conduct may entail. “The use of social media to generate the appearance of a greater level of public interest in an ICO” is the 1 on the list, then “undertaking or arranging for a group to engage in trading strategies to generate the appearance of a greater level of buying and selling activity for an ICO or a crypto-asset.” Also, “failing to disclose adequate information about the ICO” and “suggesting that the ICO is a regulated product or the regulator has approved the ICO if that is not the case” are banned as well.

SEC to Urge Court to Speed Up Kik ICO Trial

In the court, SEC stated that Kik Interactive did not provide adequate arguments why KIN tokens were not registered as securities 
24 March 2020   1846

The US Securities and Exchange Commission (SEC) called on the court to expedite the proceedings against the Canadian company Kik Interactive, accused of conducting an unregistered ICO.

In an appeal to the District Court of the Southern District of New York, the SEC stated that Kik Interactive did not provide adequate arguments why KIN tokens were not registered as securities. Recall that in 2017, Kik held an initial token offering (ICO), which attracted about $ 100 million.

The agency claims that Kik sold tokens to investors, promising them profits as the ecosystem expanded, which is considered a key characteristic of the securities offer. In its application, the SEC quoted Kik CEO Ted Livingstone saying that “the price of a KIN token is likely to increase in value.” Such an “investment scheme”, according to federal laws, makes a token a security.

According to Kik, the pre-sale tokens were 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’s statements that the ICO was outside the Commission’s authority, the agency is convinced that the 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.

Regarding open sales, Kik denies having any contractual obligations or promises to investors. Kik management claims that according to the definitions of the Commodity Futures Trading Commission (CFTC) and the United States 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.