Troubled startup Kik Interactive Inc. is shutting down its core messaging service as it battles the U.S. Securities and Exchange Commission over its $98 million initial coin offering in 2017.
The SEC sued Kik over its Kin token raise in June, claiming that the company illegally sold the tokens to U.S. investors without registering the offer and sale as required by U.S. securities law. Even before the lawsuit was filed, Kik argued that despite the ICO being linked by the company at launch to assisting it in building out its messaging app, Kin was strictly a currency and hence does not require registration.
Fighting the SEC in court does not come cheap, so the company has decided to shut down its messaging service, focusing its resources on its battle with the SEC.
“While we are ready to take on the SEC in court, we underestimated the tactics they would employ,” Kik founder Ted Livingston wrote on Medium. “How they would take our quotes out of context to manipulate the public to view us as bad actors. How they would pressure exchanges not to list Kin. And how they would draw out a long and expensive process to drain our resources.”
As part of the shutdown, Kik has laid off 70 employees, reducing its headcount to 19 core developers. Kik and Kin remain, even if the company’s messaging app is no longer.
According to Livingston, Kin is now used by “millions of people in dozens of independent apps. While the SEC might be able to push us around, taking on the broader Kin Ecosystem will be a much bigger fight. And the Ecosystem is close to adding a lot more firepower.”
Kik is not alone in fighting the SEC over allegedly unregistered securities offerings marketed as ICOs. Last week, the SEC sued ICOBox, a company that helps other companies launch ICOs, for breaching securities law in both raising money allegedly in an illegal way in its own ICO as well as acting as an unregistered broker. The SEC is also pursuing Veritaseum through the courts, while other cases, such as CarrierEQ Inc. and Paragon Coin Inc., were settled out of court.
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Source: Initial Coin Offering Search Results