The U.S. Securities and Exchange Commission has been granted summary judgment by a judge in the District Court for the Southern District of New York against tech company Kik, in the latest development in its case against the initial coin offering (ICO).
Judge Alvin Hellerstein ruled in favor of the SEC and against Kik’s $100 million ICO, finding that the token sale was in fact an unregistered digital token offer, contrary to Section 5 of the Securities Act.
“As detailed further herein, I hold that undisputed facts show Kik offered and sold securities without a registration statement or exemption from registration, in violation of Section 5. Therefore, the SEC’s motion for summary judgment is granted, and Kik’s motion for summary judgment is denied.”
As a next step, Judge Hellerstein called on the parties to create “a proposed judgment for injunctive and monetary relief”, to be submitted before October 20.
“If they cannot agree on a proposed judgment, they should note their differences in a single document, supported by separate statements in a single letter, to be submitted by the same date, October 20, 2020.”
Kik CEO Ted Livingston was quoted by The Block saying the firm was disappointed by the judge’s decision.
“We are obviously disappointed in this ruling. We are considering all of our options, including filing an appeal. To be clear, Kik has always supported the Commission’s goal of protecting investors, and we take compliance seriously. In preparing for the sale of Kin, Kik retained sophisticated counsel (both in the United States and internationally) to analyze the law as we understood it, and we continue to believe that the public sale of Kin was that of a functional currency and not a sale of securities.”
“While this is a setback for Kik, this decision does not impact Kin and the growing ecosystem of developers making Kin the most used cryptocurrency by mainstream consumers.”
The case continues.
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