The Canadian firm says it is determined to fight demand to be designated as a security
The entrepreneur behind the Kik Messenger app says the company is closing it down and laying off most of its staff to focus on a battle with the US securities regulator.
Kik Interactive is being sued by the Securities and Exchange Commission for “conducting an illegal $100 million securities offering of digital tokens. It relates to the firm’s Kin cryptocurrency which launched in 2017 and now has over 2,000,000 monthly active earners, and 600,000 monthly active spenders according to the company’s founder Ted Livingston.
The SEC charges that Kik sold the tokens to US investors without registering their offer and sale as required by the US securities laws.
“Kik told investors they could expect profits from its effort to create a digital ecosystem,” alleged Robert A. Cohen, Chief of the Enforcement Division’s Cyber Unit. “Future profits based on the efforts of others is a hallmark of a securities offering that must comply with the federal securities laws.”
Investors in cryptocurrencies have had a bumpy ride in recent years as regulators contemplate how they should react to the rise of digital assets especially with the impending involvement of Facebook.
In a blog post this week, Ted Livingston said that the Waterloo-based company has made the hard decision to close its trademark app, despite its current growth, to focus on the battle with the SEC. More than 100 employees will be impacted.
“After 18 months of working with the SEC the only choice they gave us was to either label Kin a security or fight them in court. Becoming a security would kill the usability of any cryptocurrency and set a dangerous precedent for the industry. So with the SEC working to characterize almost all cryptocurrencies as securities we made the decision to step forward and fight,” wrote Livingston.
Here to stay
He added that the company is ready to take on the SEC in court and stated that “no matter what happens to Kik, Kin is here to stay.”
Despite his success with a messaging app, Toronto-born Livingston has financial services in his blood; his father Bob is a financial adviser on Bay Street.
