Flipside Daily Mover: KIN
A coin per day, making big moves
KIN Faces Headwinds Amid Battle with SEC
June 19, 2019
KIN FCAS declined -2.08% over the last 14 days. Fundamentals are down across the board, as Developer Behavior fell 18-points (-1.98%), User Activity dropped 15-points (-1.74%), and Market Maturity slid 23-points (-3.71%). Price is down -22.74% over the same time period.
Giving Howey a Makeover
On May 28th, Kik founder and CEO Ted Livingston and lawyer Patrick Gibbs joined Laura Shin on the UnChained Podcast to announced the launch of Defend Crypto, a crowdfunding campaign to aid the project in their potential court battle with the SEC. Up until that point, Kik had reportedly spent $5 million through months of back and forth with the regulator to determine the legal status of their KIN asset. On the podcast, the pair stated the intended goal of any ensuing legal action was to define a new Howey Test for crypto tokens, as the current framework does not account for the intricacies of the new asset class.
By June 4th, the SEC made its intentions clear, suing Kik Interactive Inc. for raising $100 million in cash from an offering without proper disclosures. Steven Peikin, Co-Director of the SEC’s Division of Enforcement, stated, “By selling $100 million in securities without registering the offers or sales, we allege that Kik deprived investors of information to which they were legally entitled, and prevented investors from making informed investment decisions.’’ Fundamentals have been on the decline since the announcement, and the markets have responded in kind.
🌶️ Hot Take
Thrust into the limelight amidst the SEC’s ambiguity around US regulation of the digital asset industry, Kik is at the bleeding edge of the crypto community’s efforts to forge clarity around the treatment of tokens under securities laws.
Details from the SEC filing are quite critical of Kik actions and potential missteps leading to the ICO launch, and the regulator has a pretty solid foundation for its case. Nevertheless, Kik and its legal team have also raised a number of valid counterarguments, particularly around KIN being a digital currency, implying the Howey Test in its current state is ill-equipped to act as a barometer in determining the asset’s status as a security. Ultimately, as exchanges continue to geofence the United States and the environment grows increasingly uncertain, these court decisions are becoming increasingly critical to determine the best path forward for the industry.
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