Kik Securities Case Loss Brings Little Clarity

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  • Kik lost its case against the SEC last week following a 16-month battle
  • The Kik ICO sale was considered a security by the judge, who ruled in the SEC’s favor
  • The case has not provided any clarity on the status of crypto projects, despite Kik Founder Ted Livingston stating that as his chief aim in the case

Kik Interactive lost its case against the Securities and Exchange Commission (SEC) last week, meaning its ICO was classified as an illegal sale of securities. Kik must now agree a fine with the SEC, with Livingston’s promise that the case would offer legal clarity on the status of future cryptocurrency projects now also lying in tatters.

Kik Arguments Swept Aside by Judge

When Kik Interactive was charged with operating an unregulated securities sale by the SEC in June last year, founder Ted Livingston boldly announced that he hoped the case would set a precedent for cryptocurrency projects going forward. The waters were murky surrounding securities laws and ICOs Livingston said, and with clear regulation seemingly not forthcoming he hoped that his case would force the issue, compelling a legal precedent to be set.

Last week, Livingston’s Kik platform lost its case against the SEC, with the judge granting a motion for summary judgement in favour of the agency and summarizing that the “undisputed facts show Kik offered and sold securities without a registration statement or exemption from registration…”. Kik now has until October 20 to agree a fine with the SEC.

Livingston has since said that he is “disappointed” with the decision and is considering an appeal, although unless he has money to burn he might be better placed keeping his financial powder dry for the SEC settlement.

Almost Every ICO a Security

Livingston was, of course, hoping for a victory that would not only clear Kik’s name but also set down in black and what could and couldn’t be considered a security when it came to cryptocurrency token sales. However, the fact that the case has been summarily dismissed merely lumps Kik in with the dozens of other ICOs that have been found guilty of being unregistered securities sales since the crypto boom of 2017.

If Kik’s loss clarifies anything, it is that almost every single ICO is a security, which is far from helpful. Among the various boxes that judge Hellerstein said that Kik ticked when considering its status as a security were suggestions that the token value would increase post-ICO. These suggestions weren’t even made in any official documentations, they were things that Livingston said at crypto conferences and the like. If these statements were enough to class Kik as a security, then how many crypto projects out there can be thrown into the same boat?

Loss Offers no Clarity to Crypto Projects

Livingston talked up the Kik vs SEC case as a kind of watershed moment that would, indirectly, set a legal precedent on the nature of crypto investments and offer clear guidance for projects to follow to avoid a similar fate.

The truth is that, far from being a trailblazing moment in cryptocurrency history, the Kik case has done nothing but add itself to the litany of ICOs that have passed the Howey test and therefore been deemed as illegal securities sales.

Crypto projects are no closer to clarity than they were before the case began, and any chance of finer clarification has never seemed further away.