The United States Securities and Exchange Commission has filed a $100 million lawsuit accusing Canadian startup Kik of selling unregistered securities when it conducted its Kin token offering in 2017, CNBC reports.
Kik launched its Kin initial coin offering during the ICO and has been expecting SEC scrutiny and enforcement for some time. The company’s founder, Ted Livingston, confirmed earlier in 2019 that he expected some type of SEC enforcement effort, and that Kik would fight back against any crackdown. The startup reportedly raised $4.6 million in crowdfunding to support that defense.
Livingstone told CNBC:
“This is the first time that we’re finally on a path to getting the clarity we so desperately need as an industry to be able to continue to innovate and build.”
Meanwhile, SEC Division of Enforcement co-director Steven Peikin stressed that, “Companies do not face a binary choice between innovation and compliance with the federal securities laws."
The SEC has accused Kik of violating the law by selling unregistered securities. According to the SEC, the company represented its tokens as an investment opportunity, promoting them as investments that would rise in value as demand for Kin increased over time.