A United States judge has ruled against the Kik ICO (Initial Coin Offering) which was conducted in 2017, stating that it violated the US security laws.
In his judgement, the US Judge, Alvin Kellerstein said the US Securities and Exchange Commission (SEC) were in their rights to push for a sanction on the Kik ICO. In their report, SEC said the $100 million ICO – which was conducted by the Canadian firm – went against the security rules in the country.
As requested by the two parties involved in the legal proceedings, Judge Kellerstein made summary judgement on September 30. In his verdict, Kellerstein said that the token sale conducted by Kik met the standard of a securities sale and the participants had every reason to expect payments.
Kik CEO notes the role of supply and demand on the token
“Due to their public promotion of Kin in the Kik ICO, the company has explored the money-making potential of the kin token”, the judge said.
In their defence, the CEO of Kik noted that the role of supply and demand affected the price of the kin token. As people continue to buy the kin token, the price continues to reduce drastically as a result of the small quantity of the coin in circulation.
Noting the unique nature of the case, Kellerstein said that he had no first-hand information to influence his decision due to the nature of blockchain technology.
SEC said the Kik ICO was a means for Kik to recover from losses
The SEC first dragged Kik to court following the Initial Coin Offering where it sold $55 million worth of the kin token to investors in the US and abroad in 2017. The SEC said this one move meant that the firm violated the security laws in the country.
The SEC said that the Canadian firm used the Kik ICO to make money in a bid to recover from the losses suffered from their messaging app in the years that preceded the token sale. In its part, Kik said that the sale of the tokens would still not be seen as securities, but as a functional currency.