SEC charges Kik ICO for issuing unregistered ICO

[bbc.reporter]

The cryptospace has developed faster than the regulators have created laws on how to regulate it. I reckon ICO issuers should be allowed to issue tokens as investment as long as they are not a real scams similar to Bitconneeect.

Also, citizens should also by allowed to invest their own money in anything they want as long as they do not call the regulators if they lose their investment.



The Securities and Exchange Commission today sued Kik Interactive Inc. for conducting an illegal $100 million securities offering of digital tokens.  The SEC charges that Kik sold the tokens to U.S. investors without registering their offer and sale as required by the U.S. securities laws.

As alleged in the SEC’s complaint, Kik had lost money for years on its sole product, an online messaging application, and the company’s management predicted internally that it would run out of money in 2017.  In early 2017, the company sought to pivot to a new type of business, which it financed through the sale of one trillion digital tokens.  Kik sold its “Kin” tokens to the public, and at a discounted price to wealthy purchasers, raising more than $55 million from U.S. investors.  The complaint alleges that Kin tokens traded recently at about half of the value that public investors paid in the offering.

The complaint further alleges that Kik marketed the Kin tokens as an investment opportunity.  Kik allegedly told investors that rising demand would drive up the value of Kin, and that Kik would undertake crucial work to spur that demand, including by incorporating the tokens into its messaging app, creating a new Kin transaction service, and building a system to reward other companies that adopt Kin.  At the time Kik offered and sold the tokens, the SEC alleges these services and systems did not exist and there was nothing to purchase using Kin.  Kik also allegedly claimed that it would keep three trillion Kin tokens, Kin tokens would immediately trade on secondary markets, and Kik would profit alongside investors from the increased demand that it would foster.  The Kin offering involved securities transactions, and Kik was required to comply with the registration requirements of the U.S. securities laws.

Read in full https://www.sec.gov/news/press-release/2019-87

[rez303]

This is really a difficult case. But we also cannot defend Kik while they are misusing investors' money and continuing to offer lower prices in the next rounds. It is not a good strategy and the SEC is doing its job properly.
If you continue to let Kik grow and let them continue to run out of money, what will happen next? they will lose all their capital and so will investors.
such a lack of transparency in calling capital and selling tokens is not acceptable in a big project.

[vit05]

This was expected. Several assets will suffer similar punishments. And many exchanges are already adapting to these rules than the SEC imposes. Honestly, this punishment seems reasonable to me since it is not really possible to acquire anything with this token. It was just a stupid way to raise money.

[bbc.reporter]

@vit05. ICOs are not a stupid way to raise funding. It is a democratized way of taking money directly from willing investors without needing the banks. Also, what the American government should do is stop the scams but stop regulating the whole cryptospace by making threats and gross overreach.

[el kaka22]

I agree that there should be laws that protect the investors and they should be able to not get scammed. However sometimes it gets way too much, for example people invested into kik themselves and the token is going for half of what it used to be is still fine, there are people who invested into bitcoin that lost 70% of their money as well, going to SEC and telling them to get kik and get their money back is just a cheap way of complaining.

I do not think it should be done like this, maybe add rules beforehand and then start since that would at least put the rules in both the company and the investor and if the price still goes lower than we would at least not have this type of SEC involvement.

[Viceroy]

I do not like the fact that such organizations climb into the cryptocurrency sphere, but they just do their job. Kik's actions are too hard to justify.

[abake]

I saw this news on coindesk and it's clear that regulations are gradually creeping into crypto space. Well, it's not a bad idea, SEC could not have charged them if the kik ICO
was registered

[bbc.reporter]

There might be another reason why the SEC has acted to charge Kik on their ICO. The SEC found out that Kk was already losing money as a company before they issued their ICO. It might be a move to democratized their losses instead of democratizing opportunity for investors.

I withdraw my objection on the SEC's move in this case hehehehe. Charge them!


The allegations set out in the SEC’s lawsuit are not flattering to Kik. In its court filing, the agency airs the Canadian company’s dirty laundry, revealing among other things that it was losing money at the time it decided to sell digital tokens to the public. While Kik has framed its ICO as an opportunity for users to contribute to its digital platform, the SEC portrays it as a hail-mary money-grab by a desperate company. The agency also notes that Kik’s digital tokens have lost half their value since the sale.

Source http://fortune.com/2019/06/06/sec-kik-ico-cryptocurrency-lawsuit/

[SirLancelot]

Even if they are not scammers they are meant to follow the right process and that's what they should have done. Now they are going to face the consequences for doing the wrong thing. I don't even know anything about the kik ico because I have never taken my time to read about it and I also don't even make use of KIk, it's been a been a very long time since I last made use of their platform. But whatever, they did the wrong thing, they might be legit but they are still supposed to do the right thing, and not just start off without doing things they are meant to do.

[trade2winnn]

Well, now go to the showdown for this reason,the PROJECT JUST the BOMB,I believe KIK and token KIN,they all will be well,now all the hype will pass and all will be well!Just everything started with the fact that the TET sued the SEC for the fact that they do not qualify his tokens correctly,and thus strangle the growth,but the SEC cunning guys took and counterclaim threw to try not to justify themselves but rather to strangle the project

[ricardobs]

This was expected. Several assets will suffer similar punishments. And many exchanges are already adapting to these rules than the SEC imposes. Honestly, this punishment seems reasonable to me since it is not really possible to acquire anything with this token. It was just a stupid way to raise money.

Well, it is true that the punishment given to this ICO companies is cool for misusing investors money, but the problem is that the SEC are very much limited just to the U.S citizens and for this we are still going to see a lot of scam ICO rising all of the time, I think we need a permanent solution on how to solve this issue of scammers making away with people’s money all in the name of starting up a crypto company, this is becoming very tiring.

[Pet240]

This is one of the challenges I have always had with teams that present that projects as investment opportunities, without the necessary backings.
Had it been kik had put in place and that is necessary to have a smooth running of business, it wouldn't have become a serious case as this.
They wanted to avert a losses in the first place, but now that SEC is intervening, the loss will be aggravated.

[spadormie]

 The complaint alleges that Kin tokens traded recently at about half of the value that public investors paid in the offering.

A moment of silence for those people that invested in this project. SEC are the ones to regulate ICOs and all ICO must follow the guidelines of SEC or else they will pay for that. Anyway conducting the KiK ICO was a stupid way. Hoping that next ICOs will follow the SEC guidelines.

[tsaroz]

I'd call it a blunder from the KIK ICO team. They should have been aware of the hostile laws of United States and should have refrained from letting the US citizens from participating in the ICO or at least use that in their term. I don't think any of ICO has been registered in the US and US is being a risk better not taken for any issuing Blockchain based projects.

[Mikcik]

Bitconnect is not an ICO and although the SEC has made this provision, it has not changed the market yet. ICOs still exist and there is no clear way to classify them

[SaRmY]

All so all kontraliruyut. Well, now sue billion. And investors will go down the drain. This is America baby. Now the project will go to the bottom.

[bigcash2011]

This is the reason why crypto companies and US to escape the control and influence of SEC and other authorities although regulation is a good thing but in case of kik which is an established company with product and millions of users i think it is a bit harsh because there is no case of fraud or scam i think SEC should have fined kik for not following the rules and moved on.

[bttmember]

My view about all this situation is that SEC should start proceedings about illegal icos or fundraisings either before they open it or during the crowdsale, doing all these proceedings after the sale is risking with investors money and most investors loose because of such proceedings while SECs job is to secure investors money, so things should be handled in a better way.

[serjent05]

My view about all this situation is that SEC should start proceedings about illegal icos or fundraisings either before they open it or during the crowdsale, doing all these proceedings after the sale is risking with investors money and most investors loose because of such proceedings while SECs job is to secure investors money, so things should be handled in a better way.

SEC doesn't care about the investors.  All they care is showcasing their authority.  Remember, one US representative suggest to Ban cryptocurrency because it undermine their influence outside the US?  If they really care about their investors, they should have already created an official guidelines about cryptocurrency especially those who are creating start-ups and use ICO as crowdfunding way.
And in some point, authority is always looking for a chance where they can confiscate assets and funds of any suspected ICO's that they think did not follow the regulation.  At the end investors suffer because the fund were freezed, all trading were shutdown making their holding token become worthless.  Same way that happen to Centra.

[bbc.reporter]

@serjent05. Agreed. However, they care about the investors that have the political commections that can move the SEC's heads and arms like puppets hehehe. We did not see Ethereum charged by the SEC, did we?