Court Upholds SEC's Claim in Case Against Kik's ICO
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Oct. 1, 2020

Judge Alvin Hellerstein has upheld the US Securities and Exchange Commission's claim in the case against the Canadian company Kik.

The SEC had sued the developer of the messaging service Kik in relation to the ICO it held back in 2017 and in which it raised about $100M. According to the regulator, the company conducted an unregulated securities sale. Both parties cross-moved for summary judgment. As a result, Judge Hellerstein has ruled:

"The US Securities and Exchange Commission filed this action against Kik Interactive Inc., alleging that Kik's unregistered offering of digital tokens violated Section 5 of the Securities Act. The parties cross-moved for summary judgment. As detailed further herein, I hold that undisputed facts show Kik offered and sold securities without a registration statement or exemption from registration, in violation of Section 5. Therefore, the SEC's motion for summary judgment is granted, and Kik's motion for summary judgment is denied."

The judge has highlighted the unique nature of the case, noting he had no "direct precedent" to justify his decision due to the innovative nature of blockchain tech.

The SEC and Kik must present a proposed judgment for injunctive and monetary relief on October 20. If they do not manage to agree on this, they must indicate their differences before that date.

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