WSJ: Kik Expects SEC to Come Knocking Over Kin ICO
Kik, the social media play behind the kin token’s lucrative 2017 ICO, expects the U.S. Securities and Exchange Commission (SEC) to deem kin an unregistered security. That’s per Kik CEO Ted Livingston, who told the Journal the company is prepared to fight an incoming enforcement flex by the Commission.
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Kik Gearing Up for Battle with SEC Over Kin ICO
Kik’s leadership is preparing to face an SEC designation of its kin ICO as an unregistered security offering, company CEO Ted Livingston has revealed to the Journal.
The development comes after the social media enterprise reportedly issued a legal rebuttal late last year after having received an inaugural notice from the Commission.
Now, Livingston has said Kik is ready and will fight the U.S. securities regulator’s pressing of unregistered security status upon the kin ICO, a strategy that if brought to bear will be a far cry from other smaller ICO plays’ cedings to the SEC in recent months in exchange for enforcement leniency.
So what comes next could be a court battle. And if that fight materializes like Kik is preparing for, then they will argue that kin is an idiosyncratic utility token, not a security.
In kind, the SEC will argue the kin ICO was an unregistered security offering, and thus Kik must face some level of enforcement action, like penalty fines, token registration, and returning funds to investors.
Of course, it’s not clear what a federal judge would ultimately conclude in such a case. But whichever side wins, either outcome would be consequential for the cryptoverse.
A ruling in the Commission’s favor would suggest many more tokens offered in the past two years could eventually have their day with the SEC, at least as far as America’s nook of the cryptoeconomy goes.
On the flip side, if Kik wins the case, the impending momentum could give rise to ICO thaw and perhaps another boom as was seen, for better or for worse, in 2017.
While the SEC Sees Lots of Token Securities, U.K.’s FCA Says They Don’t
Different securities laws in the U.S. and the United Kingdom naturally lead to different enforcement approaches between the SEC and the U.K.’s top financial regulator, the Financial Conduct Authority (FCA).
That reality was evidenced this past week when the FCA published a consultation advisory paper on cryptoassets, wherein the watchdog said it didn’t believe it had the purview to regulate utility tokens in the U.K.
Moreover, in the paper the Authority offered a tentative, though very narrow, definition of securities tokens — the one type of cryptoasset the body said it did have direct jurisdiction over.
Accordingly, per the FCA’s proposed cryptoasset definitions, Kik’s kin token would almost certainly not qualify as a security in the U.K.
Contrast that with America and the SEC’s mandate, as per the WSJ the Commission reportedly feels it has a strong case to make regarding the kin ICO being an unregistered security offering under U.S. law.
Who’s to say which regulatory approach is better in the grand scheme of things, though the FCA’s approach as set out in its consultation paper is considerably more permissive — and attractive — for crypto builders.
What’s your take? If the SEC is set to go after Kik’s kin ICO, does that suggest the Commission has loads more token enforcement actions to take regarding the 2017 ICO craze? Let us know in the comments section below.
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