$5 million penalty proposed between SEC and Kik to end ICO lawsuit
October 20, 2020, 1:32PM EDT
1 min read
Less than a month after a critical court decision in their ongoing legal fight, software firm Kik and the U.S. Securities and Exchange Commission have agreed to a proposed settlement that would involve a $5 million penalty.
The two sides had until Tuesday to submit their proposal, as previously reported. According to newly published court documents, the $5 million penalty forms part of a proposed agreement in the case over Kik's $100 million initial coin offering, or ICO.
The court document notes:
"The parties have reached agreement on a proposed judgment, and file herewith a Consent executed by Kik Interactive Inc. (Exhibit A) and a proposed Final Judgment (Exhibit B). The proposed Final Judgment, if approved by the Court, would permanently enjoin Kik from committing future violations of Section 5, pursuant to Section 20(b) of the Securities Act of 1933, 15 U.S.C. § 77t(b); impose a conduct-based injunction, as set forth in the proposed Final Judgment, under Section 21(d)(5) of the Securities Exchange Act of 1934, 15 U.S.C. § 78u(d)(5); and require Kik to pay a penalty of $5 million, pursuant to Section 20(d) of the Securities Act, 15 U.S.C. § 77t(d). The proposed Final Judgment would conclude this action."
The proposed agreement caps a legal fight that dates back to the summer of 2019. At the time, the SEC alleged that Kik's sale of KIN tokens constituted an unregistered sale of securities — an argument that Kik strenuously denied. But ultimately, the court found in favor of the SEC and agreed that Kik had indeed conducted an unregistered sale.