US Securities and Exchange Commission sues Kik for “illegal” token sale

The Securities and Exchange Commission SEC has sued the Canadian messenger service Kik for an Initial Coin Offerings (ICO), which was carried out without proper authorization. This is the result of an official communication from the Authority on 4 June.

As the SEC writes in it, Kik has violated Section 5 of the Securities Law, which requires that the sale of company shares must be registered and approved. The authority wants to obtain a preliminary injunction against the company and demands as it were damages and a corresponding penalty.Specifically, the Securities and Exchange Commissioner accuses Kik that the Messenger service would have taken $ 100 million of investment capital by the end of 2017 by selling a digital token, which was to be understood as a securitization of a company share. Under current US securities law, however, it should have been filed with the Authority.

Steve Peikin, director of the SEC’s Law Enforcement Department, said in the accompanying press release that Kik would have committed an additional offense on the sale of its own token, as “the company has withheld important information from investors that they have a legal claim to had “.Robert A. Cohen, head of cybercrime in the SEC’s Law Enforcement Department, adds that Kik’s token sale is a sale of securities, as it would enable investors to profit from the company’s business.

The SEC’s announcement follows an announcement by Kik that the company is calling for a fundraising campaign to raise $ 5 million to finance the litigation dispute. On May 28, Kik CEO Ted Livingston announced that the company would set up a fund of funds called DefendCrypto.

Benjamin Sauter, an attorney for the law firm Kore & Kim, suspects that the Messenger service must have strong arguments if he is not afraid of a lawsuit with the SEC. Rather, the agency would now “take a risk if it continues to maintain the offense”.