U.S. District Court Judge Alvin Keelerstein spoke on behalf of the U.S. Securities and Exchange Commission (SEC) and ruled that the $ 100 million Canadian tech company Kik’s initial coin offering (ICO) is in violation of federal securities laws.

On September 30, Judge Keelerstein responded to requests from both parties for a brief verdict, ruling that the 2017 sale of the Kik token followed the definition of a share issue under the Howie test, as ICO participants had reasonable profit expectations.

“In public statements and public events promoting Kin, Kik praised Kin’s profit potential. The CEO of Kik explained the role of supply and demand in shaping Kin’s value: Kik had only a limited supply of Kin, so demand increased, Rod’s value would increase. ”
The judge noted the unique nature of the case, stressing that he had no “immediate precedent” for communicating his decision due to the innovative nature of distributed ledger technology.

After analyzing Kik’s CEO data and the company’s business model, Judge Keelerstein compared Kik’s proposal to a “joint venture”, stating that the company’s success in the company’s digital ecosystem “increased demand for [kik token] and thus increased investor returns.”

The Kellertsein ruling requires the SEC and KIK to jointly submit a proposed injunction and financial compensation decision by October 20.

The Securities and Exchange Commission (SEC) filed a complaint against Kik in June 2019, alleging that the company violated securities laws by selling $ 55 million worth of Kin tokens to US investors in 2017 (the rest to foreign investors).

The Securities and Exchange Commission (SEC) has characterized the digital currency KIK as an opportunistic attempt to change its economic trajectory after years of losing money from its main messaging product.

Kik’s October 30 statement confirms that the company “continues to believe that the public sale of Ken was carried out using the functional currency and not the sale of securities.”

The company added, “While this is a setback for Kik, this decision will not affect Kin, Kin-token and the growing developer ecosystem, making Kin the most widely used cryptocurrency among consumers.”

Source: CoinTelegraph

LEAVE A REPLY