SEC Sues Social Media Company Kik over Digital Coin Offering
The Securities and Exchange Commission (“SEC”) sued Kik Interactive Inc. (“Kik”) in federal court in Manhattan this week, arguing that Kik’s sale of “Kin tokens” in late 2017 was a sale of unregistered securities. The complaint alleges that Kik marketed its tokens as an investment opportunity and failed to disclose material financial information about Kik’s business. Kik has argued previously that the Kin tokens were not sold as securities and should not be covered by federal law because they are not considered stocks or bonds under relevant definitions of the U.S. securities laws.
As previously reported on this blog, Kik submitted a Wells response to the SEC in November 2018 laying the groundwork for potential litigation with the SEC. Last month, Kik established a legal defense fund, DefendCrypto.org, to assist with its legal bills incurred fighting the SEC’s suit. The fund has raised almost $5 million worth of various cryptocurrencies from backers. Continue Reading