As the SEC continues with their efforts to clamp down on the ICO community, it now appears that not all of the companies they pursued are ready to back down. This month the popular messaging app Kik declared that they are prepared to challenge the SEC in court regarding their 2017 Kin ICO. The move could signal a change in the way the SEC categorizes ICOs and the introduction of many new precedents.
Kin ICO – Kik
The Canadian-based messaging firm first caught the attention of the SEC following the completion of their ICO in September 2017. The firm secured nearly $100 million in funding. Over 10,000 investors participated in the event which saw Kin accumulate 168,732 ETH. This amount, coupled with another $50 million raised in the private sector, made Kik’s Kin ICO one of the most successful to date.
Now the SEC says that Kik violated their securities laws. This is an interesting stance as the ICO utilized an ERC-20 token during the launch. The SEC previously ruled that both Bitcoin and Ethereum are not securities. Following the ICO the tokens were migrated to the company’s private network. Once on the Kin network, these tokens function as currency. It is here where much of the confusion arises.
The Kin token is used within the Kin ecosystem to reward participants for their participation in certain activities. Additionally, outside developers have the ability to integrate the Kin rewards system into their native platforms as well. This allows developers to take advantage of the powerful incentivization program inherent within the ecosystem.
The developers behind Kin seek to create the most robust and widely used cryptocurrency in the world. The platform includes the Kin marketplace. Here users can spend their hard-earned Kin on a wide variety of digital services. Today, the Kin network includes over 30 apps and 6 million global users.
Kik vs SEC
Kin developers are certain that their token is not a security. In fact, the CEO of Kik, Ted Livingston publicly stated that the SEC is incorrect in their assessment. In rebuttal to the SEC, Livingston pointed out that on page 11 of the 1934 Securities Exchange Act it clearly states that the definition of a security “shall not include currency.”
While Kik’s legal team is sure they have a strong case, the SEC seems to think differently. The SEC got vocal on their desire to step into the ICO market in 2017. The SEC Chair, Jay Clayton, explained that he feels every ICO is a security. Obviously, this isn’t a very popular view within the cryptocommunity, and many firms are ready to challenge this idea.
Kik to set Precedents
Kik seems to feel that they have the upper hand in the upcoming legal battle for a number of reasons. For one, Kin is a currency used within the Kin ecosystem. To date, hundreds of thousands of people have used their Kin tokens to exchange for goods and services.
Livingston pointed out that this activity clearly makes Kin a utility token and therefore, not subject to SEC regulations. Further confounding the argument is the fact that Kin developers blocked Canadian investors. Canadian investors were banned from the event because Canadian regulators deeming the ICO was a security.
Now, the situation goes to court. If Kik is successful, the ramifications would alter the course of the cryptocommunity forever. As it appears now, Kik has valid reasons to defend their hugely popular cryptocurrency from the ever-reaching hands of the SEC.
Smartland Acquisition Opens New Doors for Crowdfunding
For companies working on a global scale, the shortest path to their goals is often through acquisitions of already established entities. An example of this was made recently when Smartlands announced that they had acquired a majority share of Shojin Financial Services.
By completing this move, Smartland now inherits the abilities of SFS – such as their investment licence. This licence was awarded to SFS by the Financial Conduct Authority in 2017. By receiving this licence, SFS is able to legally function as a global crowdfunding platform. The process of receiving this licence is a lengthy and difficult one – a process bypassed by Smartland through the acquisition.
With this move, there is not much left holding Smartland back from taking the sector by storm. The company even recently announced the listing of their platform utility token on industry leading crypto exchange, Bittrex. Everything is turning up Smartland.
Beyond news of this acquisition, Smartland also indicated that the first security token offering to be hosted on their platform has now gone live. This event will see the distribution of digital securities backed by UK based real estate. No doubt, the choice to base the first platform STO upon a real-estate backed asset is due to extensive experience in property investment by SFS.
The sale has a funding target of £1 million, with 30% equity to be distributed among qualified investors.
In their announcement, multiple representatives from Smartlands took the time to elaborate on these developments.
“The fact that SFS possesses the type of license necessary for the Smartlands business model to flourish is not the only reason for the acquisition…We are proud to share SFS’s values and vision for the development of financial markets around the world. The firm also has a substantial pool of classic investors that the SFS team has been developing since 2017. Now, thanks to the Smartlands proprietary technology, these private investors have the opportunity to invest in the digital ownership of real assets secured on one of the most powerful and fast blockchains in the world ‒ Stellar network.”
“The partnership with SFS is the last brick in the construction of the Smartlands Platform…This makes Smartlands one of the first fully regulated platforms for the issuance of security tokens. And Stellar will do what it does best: lightning fast, secure transactions at negligible costs to all involved, which makes Stellar the best blockchain for all operations with security tokens.”
Smartlands is a London based company that was founded in 2017. Above all, Smartlands functions as a tokenization platform, catering to a global client base.
Operations at Smartland are overseen by CEO, Arnoldas Nauseda.
Shojin Financial Services
Shojin is a UK based company that was founded in 2009. Above all, Shojin acts as an investment firm specializing in real-estate.
In Other News
An emerging trend, as of late, is the increasing adoption being seen of the Stellar blockchain within the digital securities sector. Due to the structuring of this blockchain, it is proving to be highly adept at meeting the needs of the industry. Check out the article below for another example of a company recently adopting Stellar.
AmaZix turns to KABN for Identification Services
In their experience dealing with security token offerings, KABN has noted the need for next-gen identification services. Through the creation, issuance, and management of digital securities, they are able to ensure that tokens remain compliant with regulations. The initial onboarding process, which ensures only appropriate investors gain access to these STOs, is lacking in sophistication.
This recognition led AmaZix to seek out KABN for their patent-pending identification services dubbed ‘KABN ID’. This pairing of companies announced their strategic partnership today.
While KABN ID is what drew AmaZix to their new partner, they have indicated that they intend to make use of the full suite of KABN services. This includes opening new avenues for market access through KABN’s ability to facilitate crypto-fiat transfers.
In their announcement, the CEOs of both KABN and AmaZix took the time to elaborate on this partnership.
“The overwhelming evidence justifies the need for closer scrutiny of processes and regulatory frameworks in token offerings, with the securitization of digital assets believed by many to be the natural progression for the space. It is a direction that AmaZix believes in and is working diligently towards, as demonstrated by their specialized advisory services and their partnership track record. We share their excitement and optimism for the industry’s future and look forward to collaborating.”
“Programmable regulatory compliance is a built-in feature with digital securities, ensuring the necessary KYC and AML processes are satisfied. But if STOs are to be the way forward, we have to analyze and consider the practical aspects of identity management on the blockchain, particularly with the growing debate surrounding privacy and the protection of personal data in the era of GDPR…And this is where we believe KABN’s solutions for token offering verification are technically appropriate for securing accreditation and will allow for responsible and compliant KYC processes. In addition, its neo financial services like its branded Visa prepaid card and banking wallet will give users an additional aspect that bridges the world of traditional and alternative finance, allowing them to use and spend crypto with more ease.”
AmaZix is a Hong Kong based company that was established in 2017. Above all, AmaZix functions as a consultation firm, focusing on the burgeoning digital securities sector. In their short time within the industry, they have been wildly successful – helping to raise over $1.3 billion for over 100 companies.
KABN is a Vancouver based company that was founded in 2017. Under the guidance of CEO, Ben Kessler, KABN has gone on to develop a suite of services aimed towards the digital securities sector. These range from their flagship identification service, to a crypto based debit card, and loyalty program.
In Other News
Both KABN and AmaZix have been busy establishing themselves in this nascent industry. Throughout their steps towards establishing themselves, we have detailed them various times here at securities.io. Check out the articles below to learn a little bit more about what these two companies have accomplished as of late.
Tokeny and Archax form Strategic Partnership
Archax is ironing out all the details prior to the upcoming launch of their digital securities exchange. Part of this process is establishing partnerships with issuance platforms. In doing so, Archax will ensure that their own platform will have no shortage of token listings.
With this in mind, today, the duo of Tokeny and Archax announced a strategic partnership. This relationship will see digital securities issued via the Tokeny platform, through the use of their TREX framework, listed for trading on the Archax exchange.
This development creates a comprehensive suite of services for investors, and will help the industry deliver the much sought after liquidity within these assets.
In their press release, the CEOs of both Tokeny and Archax, took the time to comment on the partnership discussed here today.
“We are building a regulated, institutional market – based in London – for institutions to trade in credible, digital securities globally. As such we want to partner with leading firms like Tokeny, who are a key part of this emerging ecosystem, and tokenising assets that can then be listed and traded on our exchange. The tokenisation of real-world assets using blockchain technology will not only unlock liquidity and create secondary markets for assets that are currently hard to trade, but also has the potential to disrupt all traditional financial markets too.”
“We know how strong Archax’s team is and they share the same belief that blockchain will transform capital markets. For blockchain to become the preferred infrastructure for this industry it’s imperative for there to be seamless transferability between the key actors in the market. By agreeing this partnership, we are able to offer the end-to-end compliant issuance of their security and Archax will provide the customer with the all-important access to the secondary market.”
Tokeny was founded in 2017, and is headquartered out of Luxembourg. Above all, Tokeny functions as a FinTech company. Over the past year, the team has set their sights on developing a comprehensive platform, tailored towards the digital securities sector. Under the watch of CEO, Luc Falempin, Tokeny has managed to establish various strategic partnerships, along with the release of the ‘TREX’ framework.
Graham Rodford founded Archax in 2018, and currently acts as the CEO of this young company. Archax maintains headquarters in London, England. Here, the company is actively developing a next-gen exchange for digital securities – which is anticipated to launch in the latter half of 2019.
In Other News
Both Tokeny and Archax have found themselves in our news feed various times over the past year. Whether establishing strategic partnerships, or announcing future STOs on their platforms, this pair of companies has been active. Below are a few articles detailing past developments of each.
- Smartland Acquisition Opens New Doors for Crowdfunding March 22, 2019
- AmaZix turns to KABN for Identification Services March 21, 2019
- Tokeny and Archax form Strategic Partnership March 21, 2019
- Blockport Announces Support for TrueUSD March 21, 2019
- The Application of Broker-Dealer and Exchange Regulations to Secondary Markets – Thought Leaders March 21, 2019