Regulation
Kik and SEC Find Middle-Ground in Ongoing Trial, Opting for Settlement?
Roughly one month ago, it appeared as though the longstanding battle between the SEC and Kik was nearing a conclusion – in favour of the SEC. Fast forward and recent documents indicate that Kik and the SEC have managed to reach a middle-ground/settlement which would satisfy both parties.
The Middle-Ground
So what is the middle-ground? It appears that the settlement was structured as a two-pronged approach. Moving forward, Kik will need to adhere to the following.
- Pay a one-time $5,000,000 USD civil penalty
- For a period of three years, Kik will be required to report the ‘issuance, offer, sale or transfer of a Covered Asset’*
*In the proposed settlement, the SEC defines a ‘covered asset’ as a cryptocurrency, digital coin, digital token, or similar digital asset
Similar Events – Different Outcomes
The events between Kik and the SEC are often compared to those which transpired between Telegram and the SEC. Each company had hosted successful ICOs, with the SEC accusing each of partaking in the illegal sale of securities to United States citizens.
The difference between these cases lay in the outcome. The saga involving Telegram ended with the company withdrawing its appeal prior to the conclusion of its court case. This was due to the company’s decision to simply abandon the project, allowing for others to take up the mantle. With the settlement between Kik and the SEC, the company will not need to abandon its project – rather, it will simply need to adhere to the previously listed restrictions.
The Takeaway
Even for a company that completed a wildly successful ICO, a $5,000,000 penalty is nothing to sneeze at. Despite this obvious setback, to have struck a settlement with the SEC is a win for all parties. It will allow Kik to finally move forward along a clear path, and the SEC to focus its efforts elsewhere.
Most importantly for Kik, there will be no need to abandon its project.
Kik
Operating out of Kitchener, Ontario, Kik is a messaging service, which was launched in 2009. With a strong belief in the future of blockchain and cryptocurrencies, Kik hosted an ICO in 2017. This event saw the sale and distribution of digital tokens known as ‘KIN’, which were to act as an intra-service currency.
CEO, Ted Livingston, currently oversees company operations.
Securities and Exchange Commission
The SEC is a U.S. based regulatory body. It is tasked with ensuring fair and transparent capital markets, through the creation and enforcement of securities based regulations.
Chairman, Jay Clayton, currently oversees company operations.
