The U.S. Securities and Exchange Commission and Kik Interactive have filed applications for a summary of the April 24 judgment.
While Kik claims that its offers are exempt from registration requirements, the SEC claims that Kik’s Initial Coin Offering (ICO) for 2017 is a clear violation of securities laws.
Kik and SEC argue over Howey’s test
Kik claims that the SEC has failed to provide sufficient evidence to maintain its clients’ profit expectations.or that Kik investors have entered into a joint venture with the company, two of the three elements of the Howey test.
The company notes that its marketing materials explicitly state that Kik “would only be one of many developers and participants who contribute to the success of the Kin economy”..
On the contrary, The SEC argues that Kik’s ICO fully meets Howey’s test, declaring that all participants in the Kin token sale have “made a cash investment” in “a joint venture” with “a reasonable expectation of a profit from the effort” done business or management of others “.
Refuting claims by Kik founder Ted Livingston that Kin has been used as a currency since its inception The SEC also argues that “Kik never identified goods or services during its marketing campaign specific you could buy that with Kin“”
SEC is based on the “ill-founded” case of Telegram
Kik’s Attorney General, Eileen Lyon, told Cointelegraph that the SEC case was based too heavily on the decisions made in the Telegram case, and that there were significant differences between the two offers:
“Our view of the SEC opposition is that it is largely based on the recent telegram case, which we believe was poorly justified and incorrectly decided. As you know, the telegram case is not a binding precedent. It is interesting to see what the impact is given the many other agencies we have mentioned and the significant differences between the two token offerings. “
“We also believe that their arguments on the subject of” integration “were coherent and circular,” he added.
Kik applies for exemption from SEC registration
Kik also argues that the SEC’s summary request should be denied because there is no evidence that one of its token problems requires registration with the SEC..
Kik’s ICO included a private pre-sale to accredited investors and a public token sales event. The company claims that The two sales were not the issue of the same class of security“and must be assessed independently.
In this respect, Kik argues that the private sale includes the private sale of investment contracts to accredited investors, while denying that his token distribution event involves the issuance of investment contracts.
“The second transaction, which took place after Kin had the infrastructure in place and was just a sale of goods to the public, was not an offer of securities. Therefore, no registration with the SEC was required for the sale. “
In addition, Kik argues that the Securities and Exchange Commission has not warned him sufficiently that he may be violating securities laws:
“The application by the Securities and Exchange Commission does not prove that Kik was duly informed that the specific facts and circumstances surrounding the sale of Kin would constitute an ‘investment contract’.”
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