Kik seeks pre-trial judgment to end prolonged ICO battle with the SEC
March 23, 2020, 2:36PM EDT
2 min read
Canadian software company Kik is seeking pre-trial judgment amid the SEC's claim that it has failed to provide sufficient evidence in defense of its $100 million unregistered tokens sale in 2017.
The company previously signaled its intention to fight the SEC’s allegation in a jury trial, with Kik CEO Ted Livingston publicly declaringthat the firm would fight the SEC until "[they] don't have a dollar left."
On March 20, both Kik and the SEC filed a memorandum at the District Court for the Southern District of New York, seeking summary judgment and attempting to avoid a full trial. However, a Kik spokesperson told The Block that "filing a motion for summary judgment does not change the fact that Kik is ready and willing to go to court."
In the memorandums, Kik and the SEC both claimed that the other party had not provided sufficient evidence for the case.
On the SEC’s side, the agency argued that Kik's alleged violation of Section 5 of the Securities Act – which outlaws securities issuance without proper registration – is "straightforward" and "easily identified." The defendant has "no cognizable defense" to this allegation, the SEC’s memorandum said.
Kik, on the other hand, contended that the company conducted two separate sales: a pre-sale targeted at accredited investors and subsequent public sale. Kik had filed a Form D notice for the pre-sale in Sep. 2017, its memorandum claimed, and the second public sale does not count as a securities offering since it did not promise returns on investor money.
"Pre-sale and TDE were distinct sales of different assets, to different parties, under different contracts and for different consideration," Kik's memorandum said. "Kik therefore is entitled to summary judgment on the SEC’s claim that they were somehow a 'single' or 'integrated' offering."
Kik's business has taken a toll as a result of the continuous legal battle and was purchased by MediaLab in Oct. 2019.