Dispute between KiK and the SEC continues
A recent case between a crypto startup that goes by the name Kik and the SEC has seen the SEC extend the process on giving a decision to crypto assets.
The dispute started around January this year when Kik published the Wells notice for the SEC and had issued some responses. According to earlier reports, the SEC has been pursuing Kik just three days after its successful 2017 sale of the Kin Token.
According to Kik, they have spent more than $5 million on the ongoing legal defence for crypto and has also seeded new ‘Defend Crypto’ funds with another $5 million. The company is also further seeking for other companies and parties to donate to the fund.
Kik may be going to Court soon
According to Laura Shin from the Unchained podcast, Kik CEO Ted Livingstone explained that the SEC refused to clarify why it made its decisions and its position towards cryptocurrency implementations.
The SEC thinks that Kik’s token sales violated security laws, but they haven’t gone into details as of yet.
The Livingstone company has said it has no problem bringing the action to the court as this would finally determine whether the SEC should have any jurisdiction on the developments and implementation of cryptocurrencies.
This may also lead to the update of a Howey test, that is set to be applied when deciding if a token is a security or not.
This Howey test according to sources is a reference to a 1946 ruling on land parcels that were sold and packaged as part of an orange grove.
Whether a token is a security or not depends namely on four things:
“The token has to be 1/ an investment of money in 2/ a common enterprise, 3/with an expectation of profits 4/dependent on the efforts of others.”
Many have suggested that a 73-year-old ruling must not be used in relation to cryptocurrency regulations as this ruling exempts currencies from being securities.
Kik will be going directly in a contest with the SEC’s claims on the cryptocurrency market and its growth. Based on reports coming from the Cryptocurrency’s lawyer, Chervinsky, he has started discussions pointing out the potential reasons for the baselessness of SEC actions.
The SEC not being able to a file suit after the Wells notice suggestions have brought doubts to the validity of their claims.
However, many think that if this does end up in court it will be much more clear to individuals and companies, as there will be clearly set guidelines to follow.