The US Court has ruled in favour of the Securities and Exchange Commission (SEC) in a case against Kik messaging platform. On Wednesday, September 30, the court ruled against Kik for violating the securities law of the country with its $100 million ICO.
Allen Hellerstein, the US court judge has ruled in favour of the SEC to finish the summer judgement against Kik, a Canadian company. The arguments from both the parties were submitted earlier through a virtual court hearing.
US Court Says Kik’s TDE Passes Prongs of Howey Test
Even though the ruling is in favour of the SEC, the U.S. Court mentioned that the Token Distribution Event (TDE) of Kik has passed three prongs of the Howey Test. As per the ruling, “Kik concedes that its issuance of Kin through the Token Distribution Event (TDE) involved an investment of money by which participants purchased or acquired Ether and exchanged Ether for Kin.” This clearly suggests that the first element of the test has been satisfied by Kik.
Through this ICO, the firm can raise around $100 million from both retail as well as the institutional investors. Among these $100 million, $55 million has been acquired from the US citizens. Due to such huge earnings, the US SEC has filed the lawsuit against the firm, back in 2019 only.
Kik is Considering to File an Appeal
The US Court now requires both the parties to submit a proposed judgement for injunctive and monetary relief. Both of them are required to do this before October 20, 2020. However, Ted Livingston, CEO of Kik is highly disappointed with this judgement and is considering filing an appeal. He mentioned that the firm has always supported the goal of the SEC to protect the investors. He also said that the public sale of Kin by Kik should not be considered as a sale of securities as it was the sale of functional currency. This is the reason why Livingston has shown his disappointment with the US Court’s ruling.