U.S SEC finally decided to sue KIK for holding an alleged unregistered securities offering according to the filing from June 4. The newly reported documents are what you are reading today in the latest cryptocurrency news.
The Securities and Exchange Commission is suing Kik for having a $100 million dollar ICO back in 2017. The filing from the agency shows that Kik held the initial coin offering for the KIN token in 2017 and the sale ended up raising $100 million. Also, the token offering broke Section 5 of the Securities Act of 1993 where it is clearly noted that the securities offerings must be registered.
The U.S SEC co-director of the Division of Enforcement Steven Peikin explained that the failure of Kik to register with the SEC is what cost the company a lawsuit. The case is that the investors were short on information to which they were entitled legally and prevented them from making informed decisions. Peikin also noted that the ‘’companies do not face a binary choice between innovation and compliance with the federal securities laws.’’
According to the altcoin news reports, KIK attempted to re-invest its business model shortly after they started losing money after launching the messaging application and then the Securities and Exchange Commission took issue with the fact that it recently traded the KIN tokens for about 50 percent of the value investors paid during the ICO. The SEC also notes that KIK executives thought that the company will shut down operations unless an ICO was held.
Previously, the Ontario Securities Commission informed Kik that its token could be classified as a security. Currently, the SEC’s lawsuit against KIK is the largest since the ICO blast and this comes as no surprise since the SEC has already explained that it will pursue all unregistered security sales from 2017.
In May this year, the CEO of Kik Ted Livingston complained that his company spent $5 million in dealing with the securities agency and that they are willing to take the regulator to court if they are persisted into pursuing law enforcement against Kik. However, this is still a developing story so make sure you check up on the updates. Also, read the original filing here.
Japanese Exchanges Demand Tax Reforms From Regulators
- Citizens who must pay tax on their cryptocurrency holdings should be granted a three-year grace period to obtain necessary documentation/registration information (before fines become applicable).
- Cryptocurrency derivative transactions should be taxed separately, and the transfer of losses should be allowed (as one of the main things Japanese exchanges need)
- Small-scale cryptocurrency transactions should not be subject to taxation.
- Cryptocurrency issuance from initial coin offerings (ICOs) should be recognized as a capital transaction rather than taxable income.
- Special tax laws and tax breaks should be introduced for certain investment deals involving cryptocurrency projects.
Circle Expands To Bermuda Due To Pro-Crypto Regulation
“While many governments around the world have not kept pace with the regulatory requirements driven by rapid innovation in digital asset businesses and crypto, Bermuda has leapt forward with an exceptionally well designed and comprehensive regulatory framework: the Digital Assets Business Act of 2018 (“DABA”). […]The Circle announcement goes further:
“Bermuda’s pioneering approach is the kind of regulatory framework we’ve long advocated to unleash growth in the crypto industry. Moreover, we’ve witnessed first hand that the Bermuda government is prepared to iterate and evolve new regulatory rules alongside the pace of technical innovation in the crypto and blockchain field.”The Bermuda subsidiary of Circle will offer all kinds of crypto services including custody. The company says it will be the first major company to approach this country since the DABA passage last year. Circle is the owner of Poloniex which is still a popular crypto exchange. The post also notes that the international users will be able to access the exchange via the new subsidiary called Circle International Bermuda. Circle expands to Bermuda mainly because of the great regulatory climate but they say that the upcoming features will not be immediately available for US customers due to the US regulations. Jeremey Allaire, the CEO of Circle, stated that the regulatory climate in the United States is muddy and is the reason why he had to lay off some of his employees. He also stated that the new Bermuda expansion will open 30 new job positions. As noted in some of the best cryptocurrency news sites, the volumes on Poloniex have fallen dramatically over the past few years and in the 24-hour period at press time, the exchange done just over $15 million. Some believe that this is a move to save Poloniex from crashing since its influence dropped after Binance joined the market. Binance had a trading volume which was at least 10 percent higher than Poloniex did in just a day.
Crypto Laws In Switzerland: What Makes This Country Special?
FINRA Prolongs Deadline For Companies To Report Crypto Activity
“As securities regulators continue to provide guidance to members regarding the unique regulatory challenges presented by digital assets – e.g., Joint Statement on Broker-Dealer Custody of Digital Asset Securities – FINRA believes it is important to keep the lines of communication with members open on this important topic.”FINRA suggests that the activities that should be reported include buying, selling and transacting digital assets, ICOs, and derivatives but also investing in digital assets and opening funds. Among others, the list also offers the advisory services or funds and offering custody services, mining cryptocurrencies and accepting the crypto as a mean of payment. Any other use of blockchain technology should be reported as well as the authority suggests. At the start of this month, FINRA and the Securities and Exchange Commission (SEC) issued a joint statement where they say there are a number of questions to be noted before they can approve crypto companies’ applications to become broker-dealers. One of the factor, why FINRA prolongs the date, is that the brokers need to prove that they engage with crypto in order to provide better regulation. According to a statement which we have in our altcoin news we can read that:
“The ability of a broker-dealer to comply with aspects of the Customer Protection Rule is greatly facilitated by established laws and practices regarding the loss or theft of a security, that may not be available or effective in the case of certain digital assets.’’
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