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.