The U.S. Securities and Exchange Commission (SEC) filed a complaint in the United States District Court for the Southern District of New York on June 4 against Kik Interactive Inc. over its 2017 initial coin offering (ICO) for its kin token. The SEC said Kik violated Section 5 of the Securities Act of 1933, which requires offerings to be registered.
Many eyes will be on this case as there are countless blockchain companies that are being investigated by the SEC for “offering securities” for selling their tokens to the public. Some companies, like Paragon and Airfox, have been forced to settle with the SEC rather than face exorbitant legal fees defending against the SEC. Last month, Kik CEO Ted Livingston said the company had already spent $5 million during the SEC investigation alone.
Kik responded to the SEC’s Wells Notice in November 2018 with a fulsome 30-page submission that it published on its website. It also launched a $5 million “Defend Crypto” crowdfunding campaign to support the defense costs of the expected June 4 lawsuit.
The case is U.S. Securities and Exchange Commission v. Kik Interactive Inc., case number 19-cv-5244 (SDNY).
Contact Andrews DeValerio if you are facing potential enforcement action by the SEC and seeking experienced securities litigators.