US District Judge Alvin Kellerstein has ruled that Canadian tech firm Kik violated federal securities laws during its Initial Coin Offering (ICO) in 2017. This is in response to the request for summary judgment submitted by the US Securities and Exchange Commission (SEC) and Kik. On the 30th of September, Judge Kellerstein ruled that Kik’s $100 million ICO violated SEC regulations.
In 2019, the SEC submitted a complaint against Kik. According to the Commission, Kik illegally sold KIN worth $55 million to both institutional and individual investors in the US. Kik then sold the remaining tokens to overseas investors.
According to Finance Magnates, Kik set aside $5 million for court cases against the regulators.
The Judge noted that Kik’s token distribution event (TDE) satisfied the three prongs of the Howey test.:
“Thus, the parties agree that the first element of the Howey Test is satisfied. The parties dispute whether the second elements are satisfied.”
Following Judge Kellerstein’s ruling, both parties will jointly submit a proposed judgment for injunctive and monetary relief. Specifically, the SEC and Kik were mandated to submit the proposal by the 20th of October.
In reaction to the latest filing, Kik CEO Ted Livingston argued that the company retained counsel in the US and overseas before the ICO. Livingston added that Kik’s belief remains that the Kin sale was “of a functional currency and not a sale of securities.”
Speaking to CoinDesk, the CEO expressed his disappointment in the ruling and considered filing for an appeal.
Image Credit: Pixabay
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