When former messaging company Kik launched its ICO, the future looked bright and full of promise. However, it has been anything but, with the U.S. Securities and Exchange Commission (SEC) putting up a spirited fight against it. In the latest twist, a U.S. judge has sided with the securities regulator, dismissing Kik’s void for vagueness defense and plunging the embattled company further into the SEC’s jaws.
The regulator filed a case against the company earlier this year, alleging that its $100 million ICO violated securities laws. Kik has been fighting back since. In its latest defense, the Toronto-based company sought to have the case dismissed on the basis of vagueness. Kik’s legal team presented its case in the Southern District of New York court, claiming that the definition of an investment contract in the U.S. securities laws is vague. Kik urged the court to thus dismiss the case.
As CoinGeek reported in October, the regulator requested a dismissal against Kik’s plea, terming its legal argument as ‘laughable.’ In its filing, the SEC claimed:
This defense asserts that, notwithstanding 70-plus years of well-settled jurisprudence, the term ‘investment contract’ in the securities laws is void for vagueness as applied to Kik’s investment scheme. This claim is untenable and should be dismissed.
And now, the presiding judge, Alvin K. Hellerstein, has sided with the regulator and dismissed Kik’s plea.
“Defendant’s motion for reconsideration is a reargument of matters that were before me when I denied the discovery sought. Defendant does not mention any new matter of fact or law, or any binding precedent that I failed to consider. That is enough to deny the motion,” the judge claimed.
He added: “Furthermore, as I originally held, the deliberations within an agency sheds no light on the application of the statute or regulation in issue. If the law is vague, or confusing, or arbitrary, as defendant argues, that can be argued objectively. Proper discovery should be focused on what defendant did, and not why the agency decided to bring the case.”
Despite putting up a spirited fight, it seems Kik’s case could be coming to an end. As CoinDesk revealed, the SEC has requested the presiding judge to allow it to depose seven individuals after the current fact discovery deadline which is on November 29. They include high-ranking Kik officials such as kin app developer Luc Hendricks and Kik’s VP of product Ilan Leibovich.
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