After a 16-month-long battle with the US Securities and Exchange Commission (SEC), the Canadian crypto startup Kik Interactive is close to settle its case. The issues between the two parties were related to the firm’s 2017 Initial Coin Offering (ICO).
New proposed settlement
The SEC revealed a new proposed settlement that includes civil penalties on the Canadian company as well as restrictions on its future plans for digital currencies. The firm raised $100 million from investors from its 2017 ICO. Since then, it has been at loggerheads with the SEC and involved in a 16-month long court case.
According to the proposed settlement, the company will pay the SEC a fine of $5 million. It will also provide the regulator with notice if it holds a public token sale again. The notification will not be counted as a request for approval but it must arrive 45 days before the planned date of issuance of tokens. The settlement does not include any clause of returning the money to investors who purchased the tokens, as is common with other ICO-related settlements with the SEC.
A legal battle with Kik
The legal battle between Kik and SEC began when its ICO caught the regulator’s attention. Kik was vocally against the regulator’s interference and went on to refute its claims via a legal challenge. The company said that the SEC is not entitled to enforcement action against. It said that the Securities Act does not provide clear guidance on the ‘investment contract’ term.
The basis of the legal battle was the notion that Kik’s token is a security offering. The SEC argued that it should require registration under the Securities Act. The SEC has been launching several inquiries into ICOs, issuing multiple subpoenas. Its tussle with Kik has been gaining media attention for the past two years, partly because of the firm’s vocal stand against the regulator’s practices.