[ad_1]
When Kik's board decided to support the company's core encryption, one of the board members described it as a "Mary Hail Pass."
It was early in 2017 and the Canadian mobile messaging start-up, after exhausting its venture capital funding, was in months to fire everyone and call him to quit. The seven most promising prospects for a potential acquisition had hesitated to buy the startup. Kik was in a desperate situation.
That's it, according to a complaint filed Tuesday by the US Securities and Exchange Commission (SEC), that Kik would have made a "$ 100 million illegal offer" with an initial coin offering (ICO) in September 2017.
The details revealed Tuesday by the SEC show that the company knew that it would face resistance from the regulators, but that did not stop Kik from going ahead. Other efforts to keep Kik afloat had failed. To prevent its shareholders from being wiped out, Kik had to make the cryptocurrency run, at least according to the version of the events presented by the SEC.
In a statement released Tuesday night, Ted Livingston, CEO of Kik, said the SEC complaint "presents an extremely selective and extremely misleading picture of the facts and circumstances surrounding our 2017 presale and token distribution event. We look forward to presenting the whole story in court. "
The fact that investors have never been informed of the company's financial situation appears to be a major and important issue for Stephan Schlegelmilch and David Mendel, SEC law enforcement personnel in the United States. origin of the complaint.
Here are seven dramatic discoveries made by regulators:
1. Kik was earning money
And they narrowed. During a year ending in mid-2016, Kik generated $ 2.2 million. During a year ending in the middle of 2017, he reported $ 1.5 million. By the time Kik decided to use an ICO, his expenses had risen to $ 3 million per month.
As the complaint says, "Despite the initial success of Kik Messenger … Kik's costs have always far exceeded its revenues and the company has never been profitable." In addition, according to the complaint, its executives had no realistic plan to increase their income operations. "
2. Nobody wanted to buy Kik
The Waterloo-based company was founded in 2009, and regulators claim that Kik's true peers were other mobile messaging companies. The complaint mentions Snapchat and WhatsApp, both of whom have managed to largely repay their investors (WhatsApp with an acquisition by Facebook and Snapchat with an IPO).
According to the complaint, Kik hired an investment bank in 2016 to look for a buyer. The bank met 35 potential buyers and seven showed interest. "As of February 1, 2017, however, the seven potential contenders had refused to buy or merge with Kik," reveals the complaint.
3 Kik has leaked more information to buyers of private sales than to the general public
Buyers who have signed on to Kik's simple Future Tokens Agreement (SAFT) have benefited from a discount and an investor accreditation check. These investors have obtained a Private Placement Memorandum (PPM), containing more information about the company. This PPM revealed that the Kik messenger was rapidly losing users.
The complaint gives more details on this point, stating that "the average number of daily users has increased from over 10 million in January 2016 to about 6 million in January 2017". Neither private investors nor those of the general sale had any information on the financial situation of the company. .
4. Kik has built special electronic stickers for his investors
Kik has developed a system that allows nearby investors to obtain special digital stickers in their messaging application. According to the SEC's complaint, this was an attempt to give the impression that the parents' tokens were actually used during the distribution. An officer sent an email to other Kik employees in June 2017 to inform him that "compliance" was the sole purpose of the product of no frills stickers.
The stickers apparently had a badger theme. A picture one is included in the complaint. Strangely, investors did not learn that the system was in development before the end of the sale.
5. Chief Executive Officer Ted Livingston has stated publicly several times that token buyers will benefit
In an email to some employees in February 2017, Livingston explained how they could create a token and then "Buy today, sell tomorrow, make a profit".
Livingston said at the Bitcoin Meetcot in San Francisco in June 2017 that the chips boom would be a period in which "people are going to make a lot of money".
At a conference in Canada in August 2017, Livingston said that "everyone can not only build this amazing new ecosystem and platform, but also make a lot of money."
6. Canadian regulators told Kik that his cryptocurrency would actually be a security
In fact, because of this advice, Kik did not sell the chips to the Canadian public. But he never asked the same question to US regulators.
Kik contacted the Ontario Securities Commission (OSC) immediately after the SEC's DAO report. At the beginning of September, OSC staff shared the view that Kik's offer was qualified as a guarantee. Canadians were excluded from the public sale. Americans, as a class, were not (although some states were blocked).
7. Many Americans put a lot of money into the public sale
Of the approximately $ 100 million raised, Americans invested $ 55 million. Of this amount, some $ 16.8 million was sold to the general public.
The SEC's complaint provides more details on how they were distributed, stating that "US-based investors included (a) two buyers who paid approximately $ 1.6 million and approximately $ 970,000 respectively; (b) 20 buyers who paid approximately $ 100,000 or more; (d) 223 who paid approximately $ 10,000 or more; and (d) 1,853 buyers who paid approximately $ 1,000 or more. "
In the complaint, the SEC seeks various forms of reparation, including a claim for "restitution of all ill-gotten gains" with interest and the payment of a civil fine.
Kik CEO Ted Livingston in April 2018, picture of Brady Dale for CoinDesk
[ad_2]
Source link