U.S SEC Officially Sues KIK For An Unregistered Securities Offering

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.