Satisfied with having killed Telegram’s TON blockchain, the Securities and Exchange Commission has allowed Kik and its Kin token to survive.
“In a nutshell, Kik is going to be OK. Beyond the monetary fine, Kik’s assets are still Kik’s property, including its remaining treasury, its Kin reserves, and all of its intellectual capital.”
The Foundation added, “with this settlement Kik is able to continue active development on the open source Kin SDK and their new wallet app, Code.”
On Oct. 21, the SEC and Kik agreed on a $5 million fine, and agreed that Kik will “provide notice to the Commission before engaging in enumerated future issuances, offers, sales, and transfers of digital assets.”
Saying that the “cloud of uncertainty” hanging over it “has dissipated,” the Kin Foundation argued that the settlement means cryptocurrency exchanges that have been unwilling to list KIN will be able to move ahead—and it will pursue those listings aggressively.
Still, there seems to be some disagreement between the SEC and Kin Foundation over the status of the KIN token. The Foundation said:
“The SEC has not asked to register Kin as a security, and didn’t impose trading restrictions on it.”
The SEC appears to have a different perspective:
“The court granted the SEC’s motion for summary judgment on September 30, 2020, finding that undisputed facts established that Kik’s sales of ‘Kin’ tokens were sales of investment contracts, and therefore of securities.”
The SEC also noted that the Simple Agreement for Future Tokens (SAFT) under which Kik initially sold the KIN token, is dead. Designed as a legal end-around for the SEC’s effective ban on ICOs, SAFT’s saw an initial private offering tokens agreed to be securities to “sophisticated” investors. This is legal under SEC regulations. But the idea was to then resell the tokens to the public after building an active blockchain ecosystem—rendering them utility tokens rather than securities.
The SEC was having none of it, and killed the biggest SAFT user, Telegram, requiring it to return $1.2 billion to first-round investors. As for Kik, it noted that the “court further found that Kik’s private and public token sales were a single integrated offering.”
With the case settled and the securities issue behind—in its opinion—the Kin Foundation said that it was now able to more actively build the Kin ecosystem, which had already been growing despite the uncertainty of the SEC lawsuit. It said:
“The Kin Ecosystem was able to develop and grow into an ecosystem of millions of users spending Kin across dozens of independent apps every month.”
The settlement also means that Kin tokens will be able to reach a price in line with their fair market value, the Foundation said.
Its immediate goals include:
- Hiring a full-time executive director in November
- Proceeding with the planned migration of the Kin ecosystem to the Solana blockchain
- Getting KIN listed on new exchanges
- Increasing user demand for KIN, which is already growing at 108% monthly