SEC and Kik propose $5M settlement to end ICO feud

The U.S. Securities and Exchange Commission (SEC) and Kik Interactive Inc. have proposed a deal that will end their legal battles over an unregistered 2017 initial coin offering (ICO). In their proposed judgment, the Canadian company will have to pay a $5 million penalty.

The SEC announced its charges against Kik in June 2019, accusing the company of conducting an illegal $100 million securities offering. Kik, best known for its online messaging application, conducted its ICO in 2017, raising $100 million. According to the SEC, the sale of the Kin tokens was illegal as the company hadn’t registered them as securities.

While Kik fought the charges spiritedly, a New York judge ruled in favor of the SEC less than a month ago. As CoinGeek reported, New York judge Alvin Hellerstein ruled that Kik violated security laws by offering the unregistered Kin tokens. He ordered the two parties to come up with a proposed judgment for injunctive and monetary relief by October 20.

In the latest development, the SEC and Kik have tabled the proposed judgment. If approved by the court, it will “permanently enjoin Kik from committing future violations of the Securities Act of 1933.” It also requires Kik to pay a penalty of $5 million.

The SEC Cyber Unit’s chief of enforcement Kristina Littman cautioned any companies that issue securities against doing so without observing securities laws.

She remarked, “Issuers seeking to use the public markets to capitalize their businesses may not evade the registration requirements of the federal securities laws. The court’s decision recognized that Kik was engaged in a single, illegal offering of securities.”

Notably, the proposed judgment doesn’t stipulate that Kik should refund investors who bought its token. In many of the SEC’s settlements with digital currency issuers, this has been one of the main demands. In May this year, for instance, California-based blockchain advertising startup BitClave settled with the watchdog over an illegal 2017 ICO. Under the terms of the settlement, BitClave refunded $25.5 million to its investors, paid $3.4 million in prejudgment interest and $400,000 in penalties.

See also: U.S. Rep. Darren Soto’s keynote talk at CoinGeek Live on Balancing Innovation & Regulation for Growth of Blockchain Technology.

Source: Read Full Article