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Cryptocurrencies

Kik sued by the SEC for its 2017 ICO

Wednesday 5 June 2019 | 09:35 AM CET

The US Securities and Exchange Commission (SEC) has been suing Kik for allegedly running an unregistered securities sale when it launched an initial coin offering (ICO) for its KIN token in 2017.

As alleged in the SEC’s complaint, Kik had lost money for years on its sole product, an online messaging application, and the company’s management predicted internally that it would run out of money in 2017. According to the SEC, Kik’s losses averaged about USD 30 million a year, and earlier attempts by Kik to be acquired by a larger technology company had failed.

In early 2017, Kik sought to pivot to a new type of business, which it financed through the sale of one trillion digital tokens. The company sold its KIN tokens to the public, and at a discounted price to wealthy purchasers, raising more than USD 55 million from US investors, according to CoinDesk.

However, the SEC complaint alleges that KIN tokens traded recently at about half of the value that public investors paid in the offering. According to the complaint, the Ontario Securities Commission previously told Kik that KIN appeared to be a security.

To defend its crypto, Kik launched a crypto crowdfunding campaign to fight against the SEC and built a dedicated website dubbed Defend Crypto to allow supporters to contribute to the fundraising effort.

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