Kik Fights Back Against ICO Complaints

DIsgraced mobile messaging app ‘Kik’ is battling back against the United States Securities and Exchange Commission who has accused the company of running an illegal initial coin offering.

Thankfully, it’s been a while since we’ve heard about initial coin offerings (or ICOs) so here’s a quick reminder on what they are all about, according to Investopedia:

“An Initial Coin Offering (ICO) is the cryptocurrency space's rough equivalent to an IPO in the mainstream investment world. ICOs act as fundraisers of sorts; a company looking to create a new coin, app, or service launches an ICO. Next, interested investors buy in to the offering, either with fiat currency or with preexisting digital tokens like ether. In exchange for their support, investors receive a new cryptocurrency token specific to the ICO.”

Kik have been accused of breaking the law by failing to register their ICO back in 2017 by the SEC, since then a lawsuit has been on-going. Now, Kik are fighting back. The ICO in question was run in return for Kin, a token native to the Kik network. Kik in essence do not believe that Kin, the token fits the requirements to be registered with the SEC, therefore Kik did not believe they should have to register their ICO. Moreover, in response to the on-going legal proceedings, Kik have accused the SEC of twisting the facts and essentially lying about the Kik network. According to Financial Times:

“In a lengthy 131-page response to the SEC’s complaint, Kik said the watchdog had made a consistent effort to twist the facts by citing quotes out of context and misrepresenting the documents and testimony that the commission gathered in its investigation. For example, the SEC alleged that a consultant warned the company that Kin needed to be a registered offering. But Kik said the consultant then immediately went on to say that in the case of a community currency, this would not be the case. You’re just selling units of property that you created that are used for a particular purpose in your app, the consultant allegedly said.”

The whole ICO culture has caused a hell of a lot of drama within the cryptocurrency industry. Many ICOs have proven to be scams and ave caused the SEC quite a headache. As a result, ICOs are now far less common, simply because we, as investors are all pretty weary of them. This case with the SEC and Kik is no doubt going to continue for some time, as the two have a battle of words. A formal trial is set to take place soon however, during which we will finally find out who’s right in this instance. Is it the SEC, or do Kik have a point?