Last week the Canadian social media company Kik—and an array of prominent backers in the crypto world—launched a $5 million campaign to fund an impending legal battle with the Securities and Exchange Commission. CEO Ted Livingston said the fight, which centers on Kik’s $100 million initial coin offering in 2017, was worth funding because it could have wide implications for blockchain startups, many of which used ICOs to fund their fledgling ventures. He said he welcomed a court battle that would allow judges to carve out more favorable regulations for digital tokens.
Gregory Barber covers cryptocurrency, blockchain, and artificial intelligence for WIRED.
On Tuesday, the SEC rang the bell for the first round of the fight, filing a civil complaint alleging that Kik’s ICO was an illegal sale of securities.
In its complaint, the SEC alleges Kik marketed its token, known as kin, as an investment opportunity, emphasizing potential returns to early buyers. It says Kik described the token as a “Hail Mary” pass to keep the company afloat as it ran short on venture capital in early 2017. The intent, the SEC alleges, was to use proceeds from the ICO to fund Kik’s operations while building out a new “speculative venture” that involved an ecosystem of apps that used kin. “Kik told investors they could expect profits from its effort to create a digital ecosystem,” Robert Cohen, chief of the Enforcement Division’s Cyber Unit, said in a statement.
Kik has been unusually vocal in its dispute with the SEC. In January it went public w
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