Shortly after the court granted the US Security and Exchange Commission’s (SEC) motion for a summary judgment, undisputed facts in the case established that the sale of Kin by Kik Interactive, Inc. (“Kik”) was an unregistered offer of securities that were not eligible for any exemption from registration, a final judgment was passed.
On October 20, 2020, the U.S. District Court for the Southern District of New York issued a final judgment against Kik Interactive, Inc. (“Kik”) in the Securities and Exchange Commission’s unregistered listing of his Kin -Token. The verdict was that undisputed facts in the case established that Kik’s sales of Kin were an unregistered offer of securities that were not eligible for an exemption from registration.
But the day after the final verdict against Kik, the Kin Foundation announced that both it and the token survived the battle with the SEC, and that the SEC stated:
“… did not ask to register Kin as a security and did not impose any trading restrictions on it.”
Anthony Tu-Sekine, Head of the Blockchain and Cryptocurrency Group at Seward & Kissel LLP, and Philip Moustakis, Counsel at Seward & Kissel LLP and a former member of the SEC’s cyber unit from the start, have been closely following this matter and have pointed out:
“The whole point of the enforcement action that the commission won was that Kin could not be traded unless it was registered with the commission or exempt from registration, which it was not.”
You also find that:
“The termination provision in the judgment is also interesting. On the one hand, it could be helpful to Kik by providing some sort of safe path for Kin to use, further distribute, or list on the stock exchange. At a later date, Kik could announce its intention to do business with Kin or list it on a stock exchange.
The ruling permanently prohibits Kik from violating Sections 5 (a) and 5 (c) of the 1933 Securities Act and requires Kik to pay a civil penalty of $ 5 million.
The final judgment also obliges Kik to notify the Commission for a period of three years prior to participating “directly or indirectly in any issue, offer, sale or transfer” of Kin or a “new cryptocurrency, digital coin”, digital token or similar digital asset issued or transferred using distributed ledger technology. “
Slam Dunk for the SEC? Not according to Kik.
The day after the final verdict against Kik, the Kin Foundation announced that the fog of uncertainty surrounding Kik and Kin had cleared in a blog post titled A New Chapter Begins in the Lives of the Kin and Kin, noting that The SEC has not asked to register Kin as a security and has not placed any trading restrictions on it.
While the interesting aspect of the commission’s enforcement lawsuit that won it was that Kin could not be traded unless it was registered with the commission or exempt from registration, which it never was.
The blog post continued:
“The judgment of the judge in the case and the terms of the settlement make it clear that the cryptocurrency Kin does not violate securities laws and should be freely traded on stock exchanges.”
Kin sees the result as positive aspects for the foundation:
- Its reserves, which fund the Kin Rewards Engine (KRE), are intact and deep, and it will continue to use them to grow and reward its ecosystem players based on economic activity and value generated.
- It is well on its way to hiring an Executive Director in November. That person will be a full-time executive fully focused on capitalizing on the decentralized ecosystem around Kin while building Kin’s brand awareness and value in the marketplace.
- The migration to Solana is proceeding according to plan. New and existing apps will be able to swap SDKs in early December, and there are also plans to migrate older Kin token users to Solana-based Kin.
- Its online community is strong and supportive, which is evident in the growing number of services being created by independent contractors
- Increased user generated demand for Kin with a growth of 108% month over month.
- An updated website is due to be published in early November.
- An open way to get listed on new exchanges that couldn’t list us before.
The Kin Foundation said it was humble with the continued support it has received over the past difficult years, and we look forward to a brighter future as we, along with all of our partners and users, look forward to further innovation and ecosystem development focus.