Kik
 |
|---|
| Kik | |
| |
| Founded | 2009 |
|---|---|
| Headquarters | Waterloo, Ontario, Canada |
| Key People | Ted Livingston, CEO |
| Employees | 10 - 25 |
| Products | Chat app |
| @kik | |
| Profile | |
| Page | |
| Website | Kik Homepage |
| Blog | Kik Blog |
Kik is a Canadian company that has produced a mobile chat application, and issued a digital asset called Kin for use in the application.
Company description[edit]
Founded in 2009, Kik announced in May 2013 that it had reached a level of 100 million registered users for its eponymous mobile chat application. Prior to that, Kik had raised $32 million in venture capital funding.[1] In 2015 Kik announced that it had received a $50 million dollar investment from Chinese Internet giant Tencent, which valued the company at $1 billion.[2]
Kik launched a public initial coin offering (ICO) for its "Kin" coin in September 2017, which raised about $48 million worth of Ether at then-current prices. Its total funding in that round included another $50 million from other sources yielding a total of about $98 million.[3] Kik users earn Kin by completing tasks like answering surveys. The company created 10 trillion kin tokens and sold one trillion in the ICO.[4]
CoinDesk, an online cryptocurrency industry news service, reported that the $48 million fell far short of the goal of about $75 million of ICO funding.[5] According to a press release issued at the end of the offering period, more than 10,000 individuals from 117 countries bought tokens. Kik CEO Ted Livingston said the broad global participation in the ICO made Kin one of the most-widely held cryptocurrencies in the world.[6]
Layoffs[edit]
In a blog post dated September 23, 2019 Livingston announced that Kik would abandon its messaging application, laying off about 100 employees, as a result of the litigation. He also said that would leave "an elite 19 person team" which would focus on the further development of Kin, the cryptocurrency.[7]
"Transparency Report"[edit]
Kin published what it called its "Transparency Report" on May 21, 2020, that describes the structure of the Kin Foundation, including a list of its executives and board members, an explanation of its annual budget, business partnerships (such as its partnership with Messari, and technical details about Kin and its ecosystem.[8]
SEC litigation[edit]
In late 2018, Kik received a Wells notice from the U.S. Securities and Exchange Commission (SEC) about its 2017 ICO. A Wells notice is a notice that the SEC intends to bring an enforcement action against the recipient. Livingston, the CEO, told the Wall Street Journal that Kik had responded. According to Livingston, the SEC believes that Kik sold unregistered securities when it conducted its ICO. Also according to Livingston, the SEC does not allege fraud. Kik reportedly intends to fight the SEC's claim that Kin are securities under U.S. law. If such a case were to go to trial, it might provide the first legal test of the SEC's approach to ICOs as securities offerings.[9]
In June 2019, the SEC filed a lawsuit against Kik for $100 million, alleging that it had violated Section 5 of the Securities Act of 1933. Steven Peikin, co-director of the SEC's Division of Enforcement, said that "companies do not face a binary choice between innovation and compliance with federal securities laws" in a press release.[10] Kik's general counsel, Eileen Lyon, said that the SEC's complaints about Kik's ICO makes inaccurate assumptions which “stretch the Howey test well beyond its definition.”[11]
Regarding the lawsuit, Livingston told the Toronto Elevate Conference in September 2019, “We have to keep going. Until that’s it, we don’t have a dollar left, a person left. We will keep going no matter how hard it is."[12]
On March 20, 2020, the company filed a motion for summary judgment against the SEC, seeking to have the case dismissed.[13] In a memorandum of law filed by Kik in support of its motion, the company took an aggressive adversarial stance saying, "With this case, the Securities and Exchange Commission (the “SEC”) seeks to stretch the definition of a “security” under the federal securities laws far beyond the plain language of the Securities Act of 1933 (the “Securities Act”), as well as any prior judicial construction of that statute. In so doing, the SEC asks this Court to bless an unprecedented and dramatic expansion of the SEC’s regulatory authority. For the reasons discussed below, this Court should decline the SEC’s invitation to ignore well established governing law."[14] The SEC filed a motion for summary judgment against Kik at the same time.[15] The motions were argued before Judge Alvin Hellerstein of the United States District Court for the Southern District of New York on July 9, 2020.
Summary judgment[edit]
On September 30, 2020 Judge Hellerstein granted the SEC's motion for summary judgment, writing ". . . I hold that undisputed facts show Kik offered and sold securities without a registration statement or exemption from registration . . ." and denied Kik's motion.[16]
Cryptocurrency defense fund[edit]
Seemingly frustrated by its dealings with the SEC, Livingston and Patrick Gibbs, a partner at law firm Cooley LLP, announced on May 28, 2019, that they established a crowdfunding page, DefendCrypto.org, to fund a lawsuit against the SEC that they anticipate will ensue as negotiations have broken down. Their goal was to raise five million dollars worth of cryptocurrencies.[17] Livingston believes that the effort against the SEC has broad implications for the entire cryptocurrency industry.[18]
As of the close of business on May 28, 2019, DefendCrypto.org had collected $2 million. (The crowdfunding website is now defunct.) Kik's website also indicated that it was supported by Circle, ShapeShift, Messari, Arrington XRP Capital, and Fight for the Future in addition to Kik.[19] Ten months later, on March 24, 2020, DefendCrypto.org reported that it had collected ostensibly additional donations in 19 cryptocurrencies valued in total at $1,431,663.[20]
In June 2019, Kik and the Blockchain Association announced the association would take over the “Defend Crypto” crowdfunding initiative. According to a report in Coindesk, Kik planned to keep the $5 million it initially contributed to the fund, but all other donated funds – about $1.9 million at the time – were be set aside for other crypto projects that faced similar lawsuits. [21]
References[edit]
- ↑ Upstart Canadian chat service Kik logs 100 million users. Globe and Mail.
- ↑ Chat app Kik valued at $1-billion after investment from China’s Tencent. Globe and Mail.
- ↑ Kik ICO Raises $98 Million But Falls Short of Target. CoinDesk.
- ↑ Are ICO Tokens Securities? Startup Wants a Judge to Decide. Wall Street Journal.
- ↑ Kik ICO Raises $98 Million But Falls Short of Target. CoinDesk.
- ↑ Kik Raises Nearly $100 Million in Kin Token Distribution Event. Cision PR Newswire.
- ↑ Moving Forward Boldly with Kin. Medium.
- ↑ Kin Foundation Publishes First Transparency Report Amid SEC Court Fight. Coindesk.
- ↑ Are ICO Tokens Securities? Startup Wants a Judge to Decide. Wall Street Journal.
- ↑ SEC sues messaging app Kik for its $100 million cryptocurrency offering. CNBC.
- ↑ The SEC Case Against Kik’s ICO Appears Strong, Experts Say. Coindesk.
- ↑ Kik CEO vows to fight SEC over Kin crypto until ‘we don’t have a dollar left’. The Block Crypto.
- ↑ Kik Backs Away From Jury Trial Request in SEC Fight Over $100M Token Sale. CoinDesk.
- ↑ KIK INTERACTIVE, INC.’S MEMORANDUM OF LAW IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT. CourtListener.com.
- ↑ Kik seeks pre-trial judgment to end prolonged ICO battle with the SEC. The Block Crypto.
- ↑ SEC wins court bid for summary judgment in ICO lawsuit against Kik. The Block Crypto.
- ↑ Kik is Crowdfunding $5 Million in Crypto to Help Fight SEC. CoinDesk.
- ↑ Are ICO Tokens Securities? Startup Wants a Judge to Decide. Wall Street Journal.
- ↑ Website. Kik.
- ↑ Contributed So Far. DefendCrypto.org.
- ↑ Blockchain Association Takes Over Kik’s ‘Defend Crypto’ Crowdfunding Effort. Coindesk.