Kik and SEC Proposes Joint Settlement With a $5 Million Penalty
According to public court documents, US Security Exchange Commission (SEC) and Canadian firm Kik has proposed a joint settlement to end the long legal battle between them. The settlement is now waiting for approval from the presiding judge Alvin K. Hellerstein. The case is related to securities law violations when Kik raised $100 million during its ICO launch in 2017.
Last month, Judge Hellerstein ruled that Kik’s ICO satisfied the famous Howey Test. Thus declared Kin token sale as an unregistered security offering. The ruling further gave until 20th October to both the parties (Kik & SEC) to file a joint proposal to resolve the legal matter.
A Sweet Deal
Now that the joint proposal is filed, Kik would have to pay $5 million in fine to SEC if ratified by the judge. The messaging platform must also give a 45 days notice to the SEC before it decides to host another token sale. In case the joint proposal is accepted, Kik could walk away with a pretty sweet deal as the settlement doesn’t require the messaging platform to return the money to the investors.
The Long Battle
The legal battle between Kik and SEC has been going on for the past two years. For a long time, Kik kept refuting SEC’s claims of selling unregistered securities. It claimed that the KIN token was a new form of currency and didn’t fall under securities. The platform also argued that any actions taken by the SEC would only harm the token holders. Thus contradicting the SEC’s claim of serving investors’ interest. This legal battle also had people believed that it could set a path for regulatory agencies to deal with cryptocurrencies.
However, the software firm has finally decided to resolve the matter with a meager $5 million penalty. It would be interesting to see the turn of events if Kik decides to attempt another token sale.