The dispute between the canadian Software company Kik, and the U.S. securities and exchange Commission SEC in the next round. After the SEC Kik had sued in June of this year, due to alleged breaches of the stock exchange act, the Start-up is now an opinion – and shows itself to be combative.
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In a Statement, which has submitted the Software Start-up Kik as an answer to the action brought by the SEC, has Kik all charges and demands the immediate cessation of the procedure. Kik speaks of an impermissible distortion of the facts to the detriment of the company. In the Letter it is said:
demonstrates The complaint of the Commission, a consistent attempt to rip facts out of context and to twist […]. The result of a lawsuit, which characterizes the events surrounding the Token Sale of the KIN Token of 2017 is wrong.
Then, the authors of the response letter, a climb for example and try to correct exemplarily on the basis of three allegations. Accordingly, the SEC in the case of evidence, that it is KIN to a Security have changed, aware of quotes from external consultants in such a way that they allow for diametrically opposite conclusions. In other words, The core of Kik’s opinion, a frontal assault on the integrity and functioning of the U.S. securities and exchange Commission’s.
This is – to put it mildly – a daring step. Although the Start was announced-up in the run-up to such a kind of strategy. That a substantial part of at least 117-page response letter aimed at the functioning of the SEC as a „highly selective“ and not an integer, represent, surprised market observers.
But also the content of Kik holds. Under point two, the SEC accuses the company of having to have against the Securities Act of 1933 failed because the Start-up said have not logged in to the Token Sale properly. A registration is however necessary inasmuch as the investors would be made relevant information accessible to the help of a competent investment decision.
This representation is reflected Kik speaks. The software company concedes that such rules exist. You would not have in this particular case, however, nothing to do with it, because it was KIN to a Token with value paper character.
Security or not?
And here we are at the core of the dispute is reached At the end, the courts will have to decide whether it is Kin to a Security or not. In the USA, it pulls to the assessment of this question in the rule, the so-called Howey Test. This is a heuristic that allows for a reasoned evaluation of whether certain financial instruments, Securities are or not.
simply put, is a Howey Test as positive if a financial instrument has the following four properties:
investors need to invest money.There is a reasonable expectation of profit.Investors invest in a company.Any profit generated by the efforts of a promoter or third party.
it was Only in December 2018, SEC Chairman Jay Clayton ICOs referred to „in many cases, as a Security“.
If you want to offer and sell securities, you must do so in Accordance with our laws,
Clayton in December 2018, said to CNBC.
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