Victor Ugochukwu · Dec 14, 2020 . 5min read
Kik settles with SEC for $5M in unregistered KIN ICO case
Kik will accept a $5 million penalty from the SEC to end litigation over a $100 million ICO sale, which it didn't register with the U.S SEC.
By Komal Joshi · Oct 21, 2020 . 5min read
According to court judgment published, Kik Interactive Inc has accepted to settle with the U.S. SEC (Securities and Exchange Commission) after a two-year legal battle. The recommended settlement, which is still to be approved by the judge, would need Kik to wire the SEC $5 million and provide it 45 days’ notice before it commences another token sale.
The proposed settlement does not designate refunding money to Kin’s initial investors. Nevertheless, it states that the SEC may offer a plan to allocate the fund subject to the court’s approval. The settlement will also establish conduct-based sanctions on the Santa Monica-based company and forbid it from infringing securities law.
However, if the settlement proceeds, Kik will not be restricted from publishing cryptocurrency in the future. Nevertheless, it will require to follow specific rules. It has to notify the SEC if it determines to operate a token sale over the next three years. Earlier, the Southern District of New York’s district court declared a ruling in favour of the SEC. At the time, Kik intended to continue fighting the case. Although, it now appears that the company has decided to settle without any additional argument.
Kik violated SEC Law?
The SEC filed the suit against Kik in May 2019 for not filing a $100 million initial coin offering for the uninformed. It claimed that its ICO constituted an illegal securities sale. Kik claimed that its token sale was not a securities sale. It further argued that possession of Kin did not form an investment contract. Kik said that people bought Kin tokens for their business, not for uncertain purposes.
However, what is surprising is the small settlement as it is unusual when the SEC reaches a deal with crypto companies over ICOs though it isn’t unprecedented. Block.one, which raised $4 billion in an ICO for its blockchain network, EOS, had to pay $24 million to the SEC when it ended its deal last October. Telegram had to pay $18.5 million for its $1.7 billion ICO when it reached an agreement in June of this year. However, Telegram did have to refund the money it raised in its ICO to investors.
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