Kik Interactive Inc. is ready to meet with representatives of the US Securities and Exchange Commission (SEC) in court to defend their interests in connection with the expected actions of the regulator in relation to its token, distributed through the ICO in 2017. This is reported by The Wall Street Journal.
The SEC believes that Kik, having sold Kin tokens worth $ 100 million, has issued and distributed unregistered securities, according to documents reviewed by the WSJ. Livingston, head of the startup, noted that the authorities do not accuse them of fraud, but insist that Kik did not register its proposal properly and, as a result, did not fulfill the requirements for information disclosure. The initiative comes from the SEC law enforcement department and requires that the commissioners vote for it - it has not been done so far.
Livingston decided to integrate a cryptographic token into its platform as a tool for its monetization - developers and users can earn Kin by creating applications or performing various types of tasks, such as passing surveys. The issuer said that from the very beginning it had positioned its token not as a valuable paper, but as a mechanism that would form the basis of a new ecosystem of applications and services, of which Kik itself would become an integral part.
While the SEC claims that the majority of ICO tokens are securities, referring to the ruling of the Supreme Court 73 years ago, Kik has put forward a counter argument according to which the distribution conditions of Kin do not allow the token to be recognized as a security.
The implementation of law enforcement actions against Kik and its foundation will further aggravate the situation of extremely inadequate regulation, the company's lawyers wrote.
In his blog, Livingston also said that the SEC contacted them a few days after the start of the ICO and 4 months after the announcement of the campaign. Then the regulator sent a request for information, "to which we are happy to respond." Then the interest of the SEC began to grow - first in the form of additional questions, after - agendas, and finally - an official statement in Washington. “The process reached its climax when they issued a Wells notification to us (note - a letter from the SEC with a warning about upcoming law enforcement measures),” writes Livingston.
According to him, the Kin token cannot be recognized as a security, at least on the basis of the fact that the Securities Act of 1934 does not allow currency to be counted on them, and Kin “is earned and used in more than 30 applications available for download on Google Play and the App Store for iOS. "