https://a16z.com/2019/05/15/kik-and-the-sec-whats-going-on-and-what-does-it-mean-for-crypto/The Kik case is an early illustration of interesting questions playing out in the cryptocurrency space, and we’ll find out soon what the SEC’s position is.
One of the most common misperceptions I hear is that “the SEC is going to put them in an orange jumpsuit”. That’s incorrect, because the SEC can only bring civil cases. But they can refer matters to the Justice Department, and sometimes the two agencies will bring parallel cases (like Theranos). However, this is rare because criminal cases require criminal intent, and are subject to the higher burden of “proof beyond a reasonable doubt”. The SEC need only demonstrate “preponderance of the evidence”, which simply means there’s a greater than 50% chance that the SEC’s claims are true.
All this isn’t meant to scare anyone off from building interesting things! It’s simply meant to give entrepreneurs some insight into the SEC’s process. So besides watching how this particular case plays out, what can you do? If this does go to court, expect to see a variety of projects, foundations, non-profits, and academics get involved by filing amicus briefs. An “amicus” is someone who is not a party to the case but has a strong interest in the subject matter. Such briefs have become common, particularly in an important case in raising novel issues, and a good set of amicus briefs can be extremely persuasive to judges.
But beyond watching this case, the best mindset for navigating uncertain regulations is to consider how will things look after the fact? You’ll always want to be able to demonstrate your good faith, common sense judgment, and reasonableness. The cases where people are able to do so are highly unlikely to be the best (or winning) vehicles for the government, so everything should be viewed through that lens.
The SEC's decision will define many important things about the future of the market. It is important that the rules become clearer
