The legal strategy of Kik in its fight against the U.S. Securities and Exchange Commission (SEC) is starting to become clear. As originally reported by CoinDesk, the Canadian instant messaging company has filed a 130-page rebuttal of the SEC’s accusations, in a step leading up to a broader legal fight.
Kik first made its problems with the SEC clear in January 2019, when they announced they would take the SEC to court for its choice to label Kin, their token offering, as an unregistered security. In the rebuttal, it’s now clear that they will accuse the SEC of taking their own comments out of context to reach that conclusion.
They specifically point to the SEC using a quote from one of their consultants, who noted that Kin could be considered a security that needed to be registered. However, they left out where he later adds, ““in the case of a community currency, there is a good basis to argue that this is not a security.”
They also noted that the SEC argument against Kin was in part due to how it was advertised to customers, and some confusion over the two offerings of the token. They conducted a private SAFT (Simple Agreement for Future Tokens) sale and a public token sale, but this is not clear in the SEC’s conclusions. “The SEC seems to be grouping [the sales together],” Livingston said. “I think what’s important in the response is to be very clear about what facts you agree with and what facts you disagree with.”
They also felt the SEC gave a false picture of the Ontario Securities Commission’s (OSC) conclusion on kin, saying it was probably a security. Kik argues the opposite, adding they informed the SEC that the OSC thought securities laws might not be applicable to kin.
All of that to say is, Kik has a lot of problems with the way the SEC wrote it’s complaint about kin; however, that doesn’t mean anything when it comes to if kin was really a security or not.
All of this is going to take some time to hash out in court. The judge has agreed to Kik’s timeline for discovery, stretching out to November 2019, leaving a trial to likely happen in 2020.
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