The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Kik Interactive Inc. for unregistered selling of securities during its initial coin offering (ICO) that raised $100 million back in 2017.
Kik Interactive based in Ontario, Canada, company valued at $1 billion is the owner of a free chat and messaging application built for teenagers, with about 300 million registered users.
Back in 2017, the company announced it would launch a $125 million token sale of its own ERC-20-based token called Kin (KIN).
The SEC in its filling highlights that Kik Interactive Inc. "has never been profitable."
"In late 2016 and early 2017, Kik faced a crisis. Fewer and fewer people were using KikMessenger. The company expected to run out of cash to fund its operations by the end of 2017, butits revenues were insignificant, and executives had no realistic plan to increase revenues through itsexisting operations. In late 2016 and early 2017, Kik hired an investment bank to try to sell itself toa larger technology company, but no one was interested," states the filling.
The regulator claims Kik violated Section 5 of the Securities Act, which states that unless a registration statement is in effect as to a security, it shall be unlawful.
Amid the news of the SEC lawsuit against Kik, the KIN token losing over 32% and is trading at $0,000025.
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