Messaging app Kik, which had launched a cryptocurrency named Kin announced that it was shutting down the messenger app completely. The Chief Executive Officer (CEO) and founder of Kik and Kin, Ted Livingstone, announced the same through a blogpost.
Livingstone said, “After 18 months of working with the SEC the only choice they gave us was to either label Kin a security or fight them in court. Becoming a security would kill the usability of any cryptocurrency and set a dangerous precedent for the industry. So with the SEC working to characterize almost all cryptocurrencies as securities we made the decision to step forward and fight.”
The CEO further added, “While we are ready to take on the SEC in court, we underestimated the tactics they would employ. How they would take our quotes out of context to manipulate the public to view us as bad actors. How they would pressure exchanges not to list Kin. And how they would draw out a long and expensive process to drain our resources.”
The case in question, referred to when in June this year, the Securities and Exchange Commission (SEC) sued the company for ‘conducting an illegal $100 million securities offering of digital tokens.’ The complaint put forward by the regulatory body alleged that Kik marketed the Kin tokens as an investment opportunity.
Steven Peikin, Co-Director of the SEC’s Division of Enforcement, said, “By selling $100 million in securities without registering the offers or sales, we allege that Kik deprived investors of information to which they were legally entitled, and prevented investors from making informed investment decisions. Companies do not face a binary choice between innovation and compliance with the federal securities laws.”
Robert A Cohen, Chief of the Enforcement Division’s Cyber Unit. had added, “Kik told investors they could expect profits from its effort to create a digital ecosystem. Future profits based on the efforts of others is a hallmark of a securities offering that must comply with the federal securities laws.”