The U.S. Securities and Exchange Commission (SEC) and Kik Interactive Inc. have proposed a deal to end their legal battles over an unregistered 2017 ICO.
The U.S. Securities and Exchange Commission (SEC) and messaging platform Kik Interactive Inc. have proposed a deal that will end their legal battles over an unregistered 2017 initial coin offering (ICO). In its proposed judgment, the Canadian company will have to pay a $5 million penalty. The US SEC announced its charges against the Candian company in June 2019, accusing it of conducting an illegal $100 million securities offering in an ICO.
The US SEC alleged that the sale of Kin token was illegal.
The Canadian company Kik, best known for its online messaging application, conducted its ICO in 2017, raising $100 million. According to the SEC, the Kin tokens’ sale was illegal as the company hadn’t registered them as securities. While Kik fought the charges spiritedly, a New York judge ruled in favor of the SEC last month. The New York judge Alvin Hellerstein ruled that Kik violated security laws by offering the unregistered Kin tokens. The court then ordered the two parties to come up with a proposed judgment for injunctive and monetary relief by October 20.
The proposal requires Kik to pay a penalty of $5 million.
In the latest development, the SEC and Kik have tabled the proposed judgment. If approved by the court, it will “permanently enjoin Kik from committing future violations of the Securities Act of 1933.” It also requires Kik to pay a penalty of $5 million. The SEC Cyber Unit’s chief of enforcement, Kristina Littman, cautioned any companies that issue securities against doing so without following securities laws. She further remarked that issuers seeking to use the public markets to capitalize on their businesses cant not evade the federal securities laws’ registration requirements. The court’s decision recognized that Kik was engaged in a single, illegal offering of securities.”