Kik CEO Ted Livingston challenges the SEC over the legality of the firm's ICO

Kik CEO Ted Livingston is looking to go head-to-head with regulators over the designation of his firm's native cryptocurrency, as reported by the Wall Street Journal. Livingston told the WSJ that the enforcement division of the Securities and Exchange Commission believes that Kik issued an unregistered security when it sold $100 million worth of "kin" tokens in September 2017. [related ID = 1]

Livingston, however, believes that the tokens are so-called "utility" tokens rather than security tokens, as the kin are meant to attract developers to build as well as stimulate and reward behavior on Kik's social media platform. Kik's public disclosure of the SEC's case and the WSJ's viewing of related documents imply that Kik wants to test the SEC's case and jurisdiction over the Canadian company.

To date, the SEC has settled most cryptocurrency-related cases outside of the courtroom, a strategy some legal experts believe is meant to create an enforcement template while avoiding a courtroom showdown. In November 2017, SEC Chairman Jay Clayton notably said: "I have yet to see an ICO that doesn’t have a sufficient number of hallmarks of a security." 

About Author

Mike Dudas is one of the founders of The Block and was the CEO until April 2020 and a board member until April 2021. Prior to starting The Block, Mike was co-founder and CRO of Button, the leading global, mobile performance marketing platform. Mike is a builder of mobile commerce businesses, having worked at Google, Braintree/Venmo and PayPal. Early in his career, Mike worked in corporate M&A and strategy for Disney. Mike earned a BA from Stanford and an MBA from Kellogg.