In what can be termed as a high-profile battle, Ted Livingston, CEO of Kik Interactive Inc., wrote in his blog on 27 January about an upcoming conflict between his company and the Securities and Exchange Commission (SEC).
Kik Interactive is a Canadian based messaging app company and is at war with SEC over the latter’s forthcoming enforcement action against Kik’s cryptocurrency Kin, launched as part of 2017 Initial Coin Offering (ICO).
The blog continued that the difference of opinion between Kik and SEC arose due to a notice issued by SEC against Kik. The SEC believed that Kik had committed a securities infraction (a crime less serious than a felony).
It all started on a friendly note when the SEC first communicated with Kik four months after the messaging app company had publicly announced their token. This was also the period during which a few days had elapsed when Kik had begun their token sale.
The blog clearly captured the change in emotion, with the SEC first starting off with an amiable exchange of information and Kik’s equally down-to-earth response. The conversations eventually gained pace, reducing to the issuance of subpoenas and its consequential testimonies in Washington.
The discussions resulted in the SEC thrusting a Wells Notice against Kik late last year. This official notice outlines why the SEC thinks that Kik has set foot beyond the boundaries of propriety.
Ted clearly captured the regulatory giant’s stance on ICO in his personal note with SEC Chair Jay Clayton stating that he believes every ICO is security.
Ted ruefully cited –
“This is the thing that everyone in the industry is dealing with, but nobody wants to talk about. For all of us to be able to continue hiring, innovating, and competing, we need to change that.”
In response to SEC’s legal notice, Kik submitted a Wells Response shortly to counter the allegations and assert the many reasons that Kik feels are valid against any missteps. Kik publicly made available the notice and response.
The next set of steps would be the SEC perusing these two documents and making a recommendation to the commissioners whether to authorize a case against Kik or not. Ted pointed out that such incidents are not unprecedented to his company. He emphasized that although regulations are paramount, this way of enforcing them is incorrect.
We are witnessing an incident where a company is trying to aver its stand on what it believes is correct and a regulatory body must soften its stand. Kik may be correct and only time will tell which warring party is following the correct principles. Such incidents leave an indelible mark in the history and foster speedy dispatch to future incidents.