Mobile messaging app Kik has said it will fight an anticipated court battle against the U.S. Securities and Exchange Commission (SEC), as the firm launches a new crowdfunding page called Defend Crypto to bolster its war chest.
The messaging platform is being challenged by the SEC over its ICO back in 2017, with the regulator contending the token was in fact a security and should have been regulated as such.
According to founder and CEO Ted Livingston, the fight will be an important test case for the sector, which he hopes will pave the way to a new legal test of when digital assets constitute a security.
The distinction between securities and non-securities is crucial because any ICO that is found to be a security offering without appropriate approvals and licenses in place will be judged to have fallen foul of securities law, with criminal ramifications.
The case goes to the heart of the debate on the merits of ICOs and how these, and other digital assets, should best be regulated.
SEC Chairman Jay Clayton has publicly said in 2018 he considers most ICOs to be a form of security offering.
“I believe every ICO I’ve seen is a security,” Clayton declared during a U.S. Senate hearing. “I want to go back to separating ICOs and cryptocurrencies. ICOs that are securities offerings, we should regulate them like we regulate securities offerings. End of story.”
On a post on its website, Kik said that failure to find an acceptable settlement meant a court battle was almost inevitable.
“After months of trying to find a reasonable solution, Kin has been unable to reach a settlement that wouldn’t severely impact the Kin project and everyone in the space. So Kin is going to take on the SEC in court to make sure there is a foundation for innovation going forward,” the company stated, adding, “…many other important crypto projects…are silently battling with the SEC to come public and raise capital from the crypto sector for their fights.”
In the past few weeks, Livingston has struck a more upbeat tone about Kin and its user base, arguing this by definition excludes the token from being a security. In an interview with CoinDesk, Livingston said:
“In the last month alone, over a million people earned kin from 40 different apps, from 40 different companies. Over a quarter million people used kin, making it the most-used cryptocurrency in the world, and they’re not even willing to say that’s not a security.”
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