Kik, the former messaging app now shifting its focus to cryptocurrency, has been involved in a court case with the SEC, which alleges that a 2017 ICO breached the commission’s regulations due to the fact that its coin, Kin, is actually a security.
Kik Legal Team Struggle for Plausible Explanation
The legal team for Kik has argued in the court of the Southern District of New York that the case against it is null and void based on the premise that the legal definition of an “investment contract” is unclear. However, the presiding judge has dismissed this argument and also threw out a subsequent motion to reconsider. Judge Alvin K. Hellerstein said:
“Defendant does not mention any new matter of fact or law, or any binding precedent that I failed to consider. That is enough to deny the motion. Furthermore, as I originally held, the deliberations within an agency sheds no light on the application of the statute or regulation in issue. If the law is vague, or confusing, or arbitrary, as [kik] argues, that can be argued objectively. Proper discovery should be focused on what [kik] did, and not why the agency decided to bring the case.”
The allegations against Kik stem from its Kin ICO in 2017, which raised over $100 million USD. While the SEC alleges that the token is actually a security and therefore should be registered with the commission, it also argues that management at the company was aware that it would run out of cash by the end of 2017, and that the offering was merely a poorly veiled attempt at keeping the company afloat.
Messaging App Acquisition
Kik’s failure to mount a plausible defense to the accusations leveled at the Toronto-based firm add increased doubt as to whether its planned digital coin will ever actually come to fruition. The company announced in September that it would be shutting down its messaging service and laying off over 100 staff in order to shift the entirety of its focus to cryptocurrency and its ongoing wrangle with the SEC.
The Kik messaging app was saved last month following an acquisition by MediaLab.
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