In a press releaseOn October 21, 2020, the SEC (short for Securities and Exchange Commission) announced the final verdict in the case of the illegal token sale by the Kik company. The Canadian firm raised a whopping $ 100 million from the sale of its KIN token in 2017, the year of the ICO boom. Now she lost the lengthy legal battle and was sentenced to a fine and strict notification requirements.
BTC-ECHO previously reported that Alvin Hellerstein, a senior judge in the United States District Court, pronounced the verdict against Kik on September 30, 2020. This said that the KIN token resembled a security instead of a functional currency. The conclusion from this is that the associated token sale was to be classified as a security issue.
However, since Kik issued this issue without any registration and without, it means that the company violated the US federal securities law.
Specifically, they are violations of Sections 5 (a) and 5 (c) of the 1933 Securities Act. Section 5 (a) states that all international trade and the carriage of unregistered securities is illegal. Section 5 (c) prohibits any person from selling, indirectly or directly, unregistered securities in international trade. Laws that Salt’s token sale also violated.
Kik loses the fight
Like many other token sales, Kik’s was split into a private and public sale. Here the court found that it was a single integrated offering.
Publishers who want to use the public markets to capitalize their companies must not evade the registration requirements of the federal securities laws. With this ruling, the court ruled that Kik would conduct a single illegal security issue.
Kristina Littman, head of cyber law enforcement for the SEC
In September, Hellerstein ordered the SEC and Kik to submit a joint judgment proposal for an injunction and financial compensation before October 20, 2020. This joint proposal has now been worked out and a final judgment by the Federal District Court has been made.
In doing so, Kik will be required to notify the Commission (SEC) within the next three years before engaging in future issues, offers, sales and transfers of digital assets. In addition, Kik is fined $ five million.
The verdict is a major setback for Kik. The company still wants to pursue its goal of creating the most widely used cryptocurrency in the world.