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The US Securities and Exchange Commission (SEC) is continuing the messaging application Kik for its initial 2017 coin offering, which raised $ 100 million. Bloomberg reports that the SEC believes that the chips issued at the time of the sale, called Kin, count as a security and that, therefore, the sale should have been registered with the government agency. If it wins, the SEC could force Kik to offer his money to his investors.
At one time, Kik was a major messaging app in the United States, particularly popular with children and teens. Unfortunately, this popularity has contributed to it becoming "the de facto application" for predator children, according to a report released in 2017. As it has lost users and its earnings have declined towards the end of the year, the SEC claimed that the company had attempted to use the ICO as "Mary Hail Pass" to reverse the situation. At the time, Kik had stated that his goal was to create a platform for developers and users of applications, allowing them to afford using the decentralized currency.
Kik welcomed the lawsuit. "What's exciting for me is that this industry will finally get the clarity it desperately needs," said CEO Ted Livingston. The Wall Street Journal. The company recently set up a crowdfunding campaign called DefendCrypto.org to raise funds for its legal defense. This campaign raised $ 4.3 million in supporters donations as of the date of publication.
The SEC uses what is called the "Howey test" to determine if the chips of an ICO are considered security. In simple terms, if the value of a token is based on the prospects of a single company, it is probably a security; if it is sufficiently decentralized, it probably is not. In 2017, the SEC concluded that the OIC of the autonomous decentralized organization (DAO) was a security using this test, while the Ethereum tokens were sufficiently decentralized not to be. In reference to this test, the SEC last year launched a fake OIC called "Howey Coin" to warn people of the dangers of unregulated ICOs.
In response to the SEC announcement, Kin's value has dropped more than 30% in the past 24 hours.
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