The legal tussle case between the United States Securities and Exchange Commission (SEC) and Canadian social media firm Kik Interactive has just taken yet another new turn. Last week, both parties filed opposing motions for summary judgment, as they continue to hold the same stance over the social media firm’s Initial Coin Offering (ICO) in 2017.
The legality of $100 million Kin Token Sale
Recall that the Securities and Exchange Commission initially filed a charge against Kik after the firm had raised $100 million through the offering of its KIN token sale. At the time, the financial watchdog charged the firm of selling unregistered securities.
The SEC argued that by selling $100 million in securities without registering the offers or sales, Kik participated in what was fraudulent misinformation of both its investors and the general public and deprived them of information to which they were legally entitled.
On Friday, however, Kik introduced new exhibits into the case in a bid to find a quick resolution to the prolonged court trial. For instance, the firm produced a record that contains about 10,000 entities that participated in the purchase of public sale portions of the Kin investment token offering.
KIK has maintained that the SEC’s move for summary judgment from the court should not be allowed, claiming that the agency has failed to present sufficient facts that show that the said transactions highlighted by the government institution required any registration with the SEC.
The firm added that it stated in its marketing material that it would be one of the many developers and participants who would be working to ensure that the KIN economy thrives.
On the flip side, however, the SEC argues that KIK’s ICO had satisfied the Howey test. The agency also pointed out that all participants in the KIN token sale made investments in a common venture and expected to get profits from the managerial and business acumen of others.
The agency also touched on the assertions of Kik founder Ted Livingston, who explained that the KIN token had been used as a currency since it was launched. Refuting that, the financial watchdog argued that Kik never identified in any of its marketing material for KIN that users could use the token to purchase any specific goods or services.
Drawing Lines Between Two Landmark Cases
So far, the case against Kik has become one of the SEC’s watershed legal battles, and a harbinger of what could come for the crypto space. The agency is also involved in a dragged-out fight with Telegram, the London-based mobile messaging company. That fight is strikingly similar to this one, as it involves Telegram’s native token – the GRAM.
However, Eileen Lyon, Kik’s legal counsel, pointed out some significant differences between both cases. For one, she pointed out that the SEC appears to be judging this case like Telegram’s – a case which she labeled as being “poorly reasoned.”
“As you know, the Telegram case is not binding precedent, so it will be interesting to see what impact it might have, in light of the many other authorities we have cited and the significant factual differences in the two token offerings,” she added.