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Kik “Void for Vagueness” Plea Against SEC Dismissed by Judge

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Kik, the former messaging app now shifting its focus to cryptocurrency, has been involved in a court case with the SEC, which alleges that a 2017 ICO breached the commission’s regulations due to the fact that its coin, Kin, is actually a security.

Kik Legal Team Struggle for Plausible Explanation

The legal team for Kik has argued in the court of the Southern District of New York that the case against it is null and void based on the premise that the legal definition of an “investment contract” is unclear. However, the presiding judge has dismissed this argument and also threw out a subsequent motion to reconsider. Judge Alvin K. Hellerstein said:

“Defendant does not mention any new matter of fact or law, or any binding precedent that I failed to consider. That is enough to deny the motion. Furthermore, as I originally held, the deliberations within an agency sheds no light on the application of the statute or regulation in issue. If the law is vague, or confusing, or arbitrary, as [kik] argues, that can be argued objectively. Proper discovery should be focused on what [kik] did, and not why the agency decided to bring the case.”

The allegations against Kik stem from its Kin ICO in 2017, which raised over $100 million USD. While the SEC alleges that the token is actually a security and therefore should be registered with the commission, it also argues that management at the company was aware that it would run out of cash by the end of 2017, and that the offering was merely a poorly veiled attempt at keeping the company afloat.

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Messaging App Acquisition

Kik’s failure to mount a plausible defense to the accusations leveled at the Toronto-based firm add increased doubt as to whether its planned digital coin will ever actually come to fruition. The company announced in September that it would be shutting down its messaging service and laying off over 100 staff in order to shift the entirety of its focus to cryptocurrency and its ongoing wrangle with the SEC.

The Kik messaging app was saved last month following an acquisition by MediaLab.

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Kik Messenger to Shut Down as Company Shifts Focus to Kin

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Kik

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Kik Interactive has announced that it is closing its messaging service due to a legal wrangle with the SEC over its cryptocurrency, Kin.

The troubled messaging app, which still has millions of users worldwide, has been involved in a legal battle with the United States Securities and Exchange Commission in recent months after the SEC announced it was suing Kik over the $100 million USD raised from an ICO in 2017. Bloomberg reported back in June that the SEC argues that the token used in the ICO, Kin, counts as a security and as a result, the sale should’ve been registered with the commission.

CEO Ted Livingston announced this morning that the company was taking measures, including the closure of its messaging service, in order to continue its fight with the SEC. The company will also fire over 100 employees, reducing the company to “an elite 19 person team,” focusing exclusively on “converting Kin users into Kin buyers.” Livingston added that “Instead of selling some of our Kin into the limited liquidity that exists today, we made the decision to focus our current resources on the few things that matter most.

However, the SEC also alleges that management at the company was aware that Kik would run out of money by 2017 and that the ICO was merely a thinly veiled attempt to keep the company afloat. Livingston claims that the SEC’s attempts to characterize all cryptocurrencies as securities will kill the usability of any coin and set a dangerous precedent for the industry. He said the SEC presented the company with the choice of either labeling Kin as a security or fighting them in court, and that “we made the decision to step forward and fight.”

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Kik’s plans for the coin going forward include improving the Kin blockchain to facilitate more transactions and the creation of a mobile wallet to facilitate the purchasing and trading of Kin.“No matter what happens to Kik, Kin is here to stay […] We are all in. And despite these hard decisions my confidence in Kin only continues to grow,” said Livingston.

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Kik Adviser to Face Deposition From SEC This Week

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The US Securities Exchange Commission (SEC) has requested the deposition of a representative from Kik, the former messaging app that now focuses on cryptocurrency, in its longstanding wrangle, which claims that the Canadian company violated securities laws when it carried out an ICO in 2017.

On January 23, a judge in the Southern District of New York ordered Kik to divulge information detailing how its business has changed since 2018, with the company shutting down its messaging service in order to focus on cryptocurrency. Initially hoping to hear from Kik CEO, attorneys representing both parties have agreed for technical advisor Tanner Philp to respond to the SEC’s inquiries on January 29.

According to his website, Philp began working in crypto after writing a college thesis on Bitcoin in 2013, which helped him land a job “supporting the CFO of a fledging chat app called Kik,” which led to his involvement in creating the initial proof-of-concept for Kin, Kik’s native coin.

The allegations against Kik stem from its Kin ICO in 2017, which raised over US$100 million. While the SEC alleges that the token is actually a security and, therefore, the offering should have been registered with the commission, it also argues that management at the company was aware that it would run out of cash by the end of 2017, and that the offering was simply a thinly veiled attempt at keeping the company afloat.

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After an initial attempt to have the case thrown out on the grounds of vagueness was dismissed by Judge Alvin K. Hellerstein, Kik has pushed for a formal definition of a trial date for the lawsuit to be set. Livingstone has expressed his desire for the case to go to trial as soon as possible, and the two parties have since agreed on a roadmap to conclude the trial in June 2020 in response to a court order issued November 26.

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