The SEC and Kik both filed oppositions to the other party’s motions for summary judgment this week, reiterating their arguments in the case and their respective takes on whether statements collected during the court battle to date are complete and accurate. According to the SEC, Kin would have no value if it wasn’t for Kik’s efforts to “champion” the ecosystem. It further claimed that “at no point during its marketing campaign did Kik identify any specific good or service that could be purchased with it token.
The SEC filed a lawsuit against Kik in June 2019.
The US SEC first filed the lawsuit against Kik in June 2019, months after letting the startup know that it was investigating whether the $100 million kin token sale was an unregistered offering of securities. SEC claims in its filing that all persons and entities that bought Kin through the $100 million offerings (‘Kin investors’) (1) invested money (2) in a common venture (3) with a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others. SEC referred to the Howey Test by these three points, which are used to judge whether a token is a security or not.
“SEC cannot prove that Kin led its customers to expect profits.”
Kik, in its filing, claimed that the SEC’s motion for summary judgment should be denied because it has not presented facts demonstrating that either transaction, pre-sale, or TDE or token distribution event required registration with the SEC. Kik sold off the messaging app portion of its business late last year. Ted Livingston, the Kik founder, has said that Kin is used as a currency and has been since its launch. The filing further claims that the second transaction, conducted after the infrastructure for Kin already existed, and given that it was merely a sale of goods to the public, was not an offering of securities. “Thus, the sale did not require registration with the SEC,” it added.
