KIN KIK SEC - what could be the outcome?

[josephdd1]

Since KIK's getting sued by the sec, many people are saying that Kik will fight it if the case goes to hearing..
but what would be the ultimate outcome if sec wins? what if defendcrypto funds is not enough?

could sec force kik to buy back all tokens and / refund investors? or would kik be let go with just a hefty fine / settlement? what do you guys think the most realistic worst-case scenario could be?

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[Theb]

IMO the U.S. SEC is stepping out of its boundaries by filing a lawsuit against a foreign company, KIK. is owned by Kik Interactive a Canadian company who has its messenger being operated in within their borders, having them launch a token sale within Canada doesn't officially make their Kin tokens primarily available to U.S. citizens, even if there are U.S. citizens who participated in the sale I don't think that it makes them liable on the actions of their own citizens. I don't even think that SEC has a proper jurisdiction on this case.

[figmentofmyass]

IMO the U.S. SEC is stepping out of its boundaries by filing a lawsuit against a foreign company, KIK. is owned by Kik Interactive a Canadian company who has its messenger being operated in within their borders, having them launch a token sale within Canada doesn't officially make their Kin tokens primarily available to U.S. citizens, even if there are U.S. citizens who participated in the sale I don't think that it makes them liable on the actions of their own citizens. I don't even think that SEC has a proper jurisdiction on this case.

multiple sources are reporting they did not prohibit USA investors from their ICO. the SEC is alleging that $55 million of total token investment came from USA buyers: https://www.thestar.com/business/2019/06/04/sec-sues-kik-for-us100m-for-illegal-securities-offering-of-digital-tokens.html

if they didn't explicitly prohibit USA investors and didn't implement IP restrictions to prevent them, this is probably a slam dunk for the SEC. agencies like the SEC always operate on the basis that if a company serves or issues securities to USA residents, that they are under USA jurisdiction. good luck to KIK; i don't think this will end well for them. a settlement and very hefty fine if they are lucky.

[Theb]

~snip~

multiple sources are reporting they did not prohibit USA investors from their ICO. the SEC is alleging that $55 million of total token investment came from USA buyers: https://www.thestar.com/business/2019/06/04/sec-sues-kik-for-us100m-for-illegal-securities-offering-of-digital-tokens.html

if they didn't explicitly prohibit USA investors and didn't implement IP restrictions to prevent them, this is probably a slam dunk for the SEC. agencies like the SEC always operate on the basis that if a company serves or issues securities to USA residents, that they are under USA jurisdiction. good luck to KIK; i don't think this will end well for them. a settlement and very hefty fine if they are lucky.

Given that the lawsuit is filed in the US and a lot of U.S. citizens have suffered losses after the token sale I know that Kik Interactive on coming out clean are slim to none. For the facts I have stated I know that it wouldn't be enough to throw the case in any way but those are just the points why this lawsuit shouldn't even exist in the first place. I have seen a Twitter thread about this case and really Kik Interactive doesn't have any fight with SEC against this.

[magneto]

IMO the U.S. SEC is stepping out of its boundaries by filing a lawsuit against a foreign company, KIK. is owned by Kik Interactive a Canadian company who has its messenger being operated in within their borders, having them launch a token sale within Canada doesn't officially make their Kin tokens primarily available to U.S. citizens, even if there are U.S. citizens who participated in the sale I don't think that it makes them liable on the actions of their own citizens. I don't even think that SEC has a proper jurisdiction on this case.

multiple sources are reporting they did not prohibit USA investors from their ICO. the SEC is alleging that $55 million of total token investment came from USA buyers: https://www.thestar.com/business/2019/06/04/sec-sues-kik-for-us100m-for-illegal-securities-offering-of-digital-tokens.html

if they didn't explicitly prohibit USA investors and didn't implement IP restrictions to prevent them, this is probably a slam dunk for the SEC. agencies like the SEC always operate on the basis that if a company serves or issues securities to USA residents, that they are under USA jurisdiction. good luck to KIK; i don't think this will end well for them. a settlement and very hefty fine if they are lucky.

If they did indeed offer their securities/tokens to US residents, then I don't see any chance of Kik's case holding up.

Even if they did prohibit U.S. IP addresses and so forth, I don't think the case is too bright for them given the fact that at the very least, SEC's expectations is most likely to conduct KYC to filter out all the investors in their jurisdiction. If SEC doesn't have jurisdiction over this matter, then why would they even be bothering to investigate it the first place?

However, it will be a complex issue given that this goes across borders. I don't think that a buyback for tokens is likely, so imo a hefty fine is still the most likely outcome out of this situation.

[Kemarit]

SEC's regulations are very clear. If a company or a entity offers securities to American citizens, even that company is outside of the soil, it still falls under the jurisdiction of SEC. That's why they are very quick to pull the trigger here sue Kik. And what is Kik's defense? then say that they sell tokens and not securities, and that is a weak defense, in my opinion. So this litigation is a landmark, and it could set a precedent and let this be a warning to all companies as well.

[josephdd1]

SEC's regulations are very clear. If a company or a entity offers securities to American citizens, even that company is outside of the soil, it still falls under the jurisdiction of SEC. That's why they are very quick to pull the trigger here sue Kik. And what is Kik's defense? then say that they sell tokens and not securities, and that is a weak defense, in my opinion. So this litigation is a landmark, and it could set a precedent and let this be a warning to all companies as well.

How is it a weak defense? KIN is entirely a utility based token and not a speculative investment vehicle. Crypto assets are not regular securities. Regular securities only had one function, to raise money. Crypto assets serve a utility. And there needs to be a separate category for these. There haven't been anything like a crypto asset in the past. Something that both acted as a currency and as an investment vehicle.

SEC's main agenda is to dominate world economics, and that is why they are after cryptos. But with increased pressure from large companies, that stance will change soon. Maybe Libra / Facebook and JPM would be a start. SEC doesn't have the balls to go after these companies.

[timerland]

Since KIK's getting sued by the sec, many people are saying that Kik will fight it if the case goes to hearing..
but what would be the ultimate outcome if sec wins? what if defendcrypto funds is not enough?

could sec force kik to buy back all tokens and / refund investors? or would kik be let go with just a hefty fine / settlement? what do you guys think the most realistic worst-case scenario could be?

I think that the most likely outcome is some sort of settlement deal between the SEC and Kik occurs without any actual prosecution.

It is unfeasible for them to buy back all tokens, because of how widespread they are, and the fact that it was offered globally. It is also unclear how much of a hold the SEC even has over a company that seems to be incorporated in Canada.

SEC's regulations are very clear. If a company or a entity offers securities to American citizens, even that company is outside of the soil, it still falls under the jurisdiction of SEC. That's why they are very quick to pull the trigger here sue Kik. And what is Kik's defense? then say that they sell tokens and not securities, and that is a weak defense, in my opinion. So this litigation is a landmark, and it could set a precedent and let this be a warning to all companies as well.

How is it a weak defense? KIN is entirely a utility based token and not a speculative investment vehicle. Crypto assets are not regular securities. Regular securities only had one function, to raise money. Crypto assets serve a utility. And there needs to be a separate category for these. There haven't been anything like a crypto asset in the past. Something that both acted as a currency and as an investment vehicle.

SEC's main agenda is to dominate world economics, and that is why they are after cryptos. But with increased pressure from large companies, that stance will change soon. Maybe Libra / Facebook and JPM would be a start. SEC doesn't have the balls to go after these companies.

Unfortunately, the fact is that despite a lot of things that is being offered not being securities, the SEC would regard them as such and come after these businesses that are conducting an initial offering nonetheless. It's not really up to us to interpret it.

[Kemarit]

SEC's regulations are very clear. If a company or a entity offers securities to American citizens, even that company is outside of the soil, it still falls under the jurisdiction of SEC. That's why they are very quick to pull the trigger here sue Kik. And what is Kik's defense? then say that they sell tokens and not securities, and that is a weak defense, in my opinion. So this litigation is a landmark, and it could set a precedent and let this be a warning to all companies as well.

How is it a weak defense? KIN is entirely a utility based token and not a speculative investment vehicle. Crypto assets are not regular securities. Regular securities only had one function, to raise money. Crypto assets serve a utility. And there needs to be a separate category for these. There haven't been anything like a crypto asset in the past. Something that both acted as a currency and as an investment vehicle.

The thing is that they didn't register it to SEC, meaning not complaint. If they are ready to face SEC then they should prepare a good defense. They didn't allowed Canadians to buy because of the 'weak guidance' from Canadian's SEC? But then allowed US citizens when they know that the US SEC is very clear about their guidelines and framework.

[josephdd1]

SEC's regulations are very clear. If a company or a entity offers securities to American citizens, even that company is outside of the soil, it still falls under the jurisdiction of SEC. That's why they are very quick to pull the trigger here sue Kik. And what is Kik's defense? then say that they sell tokens and not securities, and that is a weak defense, in my opinion. So this litigation is a landmark, and it could set a precedent and let this be a warning to all companies as well.

How is it a weak defense? KIN is entirely a utility based token and not a speculative investment vehicle. Crypto assets are not regular securities. Regular securities only had one function, to raise money. Crypto assets serve a utility. And there needs to be a separate category for these. There haven't been anything like a crypto asset in the past. Something that both acted as a currency and as an investment vehicle.

The thing is that they didn't register it to SEC, meaning not complaint. If they are ready to face SEC then they should prepare a good defense. They didn't allowed Canadians to buy because of the 'weak guidance' from Canadian's SEC? But then allowed US citizens when they know that the US SEC is very clear about their guidelines and framework.

What are you talking about? There is no Canadian SEC each of their provinces have their own laws and that makes it hard for any financial product to be introduced to that country.
Whereas in 2016 / 17 there was no clear negative stance from the SEC to ban or regulate crypto under the regular laws. They were supposed to introduce some new category, it was all over the news back then.

[Sujoris]

Thanks Jospeh for directing me here. I made the conscious decision of investing in Kin. And there is a sufficient reason for that. First of all, even ethereum was sold under the pretext that, you invest now, you gain later, without any effort. The lack of effort and gaining capital is part of the Howey test, which is what SEC use to call kin a security. But the reality is, sec have also considered eth to be sufficiently decentralized now. Why can't they allow enough time for kin to go through the same process?