KIK CEO Gears Up to Take on the SEC Over the Kin Cryptocurrency Token ICO, Worth $100 Million
KIK CEO Ted Livingston is challenging the SEC’s treatment of the firm’s native token which was released last year.
In September 2018, $100 million worth of Kin tokens were sold to the public. However, according to Livingston, the enforcement division of the Securities and Exchange Commission believes that Kik issued an unregistered currency, a claim they deny.
The firm argues that the tokens issued aren’t security tokens but utility tokens whose purpose is to attract developers as well as create a sense of incentive for users of their platform. It is believed that the firm plans to formally challenge the SEC’s position.
The Greater Effects
This case, should it make it to court, could be a landmark case is determining the extent of the SEC’s influence on the ICO market and also what constituted a security token in the first place.
Kik’s argument is that the Token wasn’t issued as a form of security but for utility purposes and as such, aren’t subject to the same laws.
The problem is that a majority of tokens that are issued are security tokens and as such, there aren’t definite rules put in place for tokens that fall outside that category.
One of the reasons for the SEC stringent treatment of ICOs is the fact that many have been used for fraudulent purposes and the SEC was forced to shut down several ICOs last year for this reason. This case, however, could be beneficial for both parties as the SEC will get more information about Utility tokens and how to handle them and utility tokens will become better discussed and understood in the industry.
As of now, the SEC has stated that a majority of the ICOs launched in 2017 and 2018 should have been classified as securities with SEC Ajayi Clayton saying,
“I have yet to see an ICO that doesn’t have a sufficient number of hallmarks of security.”
The argument behind this is that ICOs fall under a 73-year law that classifies them as securities. This is because they are traded for profit and their performance is dependent on the performance of the firm they are tied to.
Kik says that Kin isn’t affected by this because they are utilities and those who bought into them were told not to expect a profit from them. As of now, Kin is trading at $0.00003 per unit.