The Securities and Exchange Commission (SEC) has penalized Kik for launching an initial coin offering (ICO) that allegedly did not go through the appropriate registration protocols with the agency. Kik is now being required to fork out a $5 million fee.
The SEC and Kik Have Reached a Settlement
The SEC has sworn up and down over the past few years that it would go after all token offerings that have in some way or another gone against its rules. It has warned many crypto ventures offering securities that should they refuse to properly register their tokens, they can expect a crackdown of sorts followed by monetary penalties and further disciplinary action that could potentially affect their futures in the world of token selling.
The SEC claims that Kik broke numerous securities laws by offering what is now known as the Kin token, which at the time of writing, is worth only about $0.000011. The case against Kik has been ongoing since 2019. It was on Wednesday when the US District Court of the Southern District of New York entered a final judgement against the firm and the token that the SEC claims was offered illegally to traders.
ICOs have somewhat lost their stamina in recent years given how fraudulent many of them have been and how much money has been lost. At one point, they were considered the ultimate method for raising capital, yet over time, several investors have turned away from ICOs out of fear that all their money could wind up disappearing for good.
The SEC states that Kik held its ICO in the year 2017 during a time when bitcoin was skyrocketing. In addition, the government agency claims that Kik knew it would raise money the same year. In all, it is believed that more than $50 million was earned through the venture.
SEC leaders explained in a statement:
[The] court granted the SEC’S motion for summary judgement on September 30, 2020, finding that undisputed facts established that Kik’s sales of ‘Kin’ tokens were sales of investment contracts, and therefore of securities, and that Kik violated the federal securities laws when it conducted an unregistered offering of securities that did not qualify for any exception from registration requirements.
Aside from being forced to pay money, Kin must inform the SEC of every time it plans to sell digital assets over the next three years. the company has released the following in response to the SEC’s judgement on the matter:
This has been a long, expensive and public battle between Kik and the SEC. Although we respectfully disagree with Judge Hellerstein’s analysis in his ruling and were prepared to pursue an appeal, the SEC offered settlement terms that allow us to put this behind us and focus on our mission. We look forward to an exciting future for the Kin ecosystem and the millions of mainstream consumers who earn and spend Kin every month.
Source: Live Bitcoin News