Kik Got Kicked? SEC Filed Lawsuit on its $100mn Unregistered ICO

The U.S. Securities and Exchange Commission (SEC) sued the Canadian messaging firm Kik Interactive Inc. for conducting an unregistered $100 million securities offering of digital tokens and sold the tokens to U.S. investors, as revealed in its official press release on 4 June.

The SEC stated that Kik had violated the registration requirements of Section 5 of the Securities Act of 1933, and SEC seeks a permanent injunction, disgorgement plus interest, and a penalty.

Steven Peikin, Co-director of the SEC’s Division of Enforcement emphasized that Kik did not inform investors with sufficient information. He added “By selling $100 million in securities without registering the offers or sales, we allege that Kik deprived investors of information to which they were legally entitled, and prevented investors from making informed investment decisions.”

The press further stated that Kik marketed the Kin tokens as an investment opportunity. Robert A. Cohen, Chief of the Enforcement Division’s Cyber Unit said “Kik told investors they could expect profits from its effort to create a digital ecosystem.” He added “Future profits based on the efforts of others is a hallmark of a securities offering that must comply with the federal securities laws.”