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SEC Charges Kik With Conducting $100M Unregistered ICO
81–90 of 343 posts
Re: SEC Charges Kik With Conducting $100M Unregistered ICO
#82Earlier quoted context omitted.
They “delivered” only because they sold wheelbarrows to the 49ers. As gold rush history will tell you, most fortunes were made by merchants not miners. Name a non-ICO-infrastructure ICO that isn’t a scam.
Ethereum as infrastructure is also a dicey proposition. It works, slowly, but it doesn’t seem like there’s a lot of demand for “dapps” outside ICO tokens, gambling, and the odd Ponzi scheme. The smart contract revolution at this point is complete vapor ware.
Other popular smart contracts right now: an ETH-backed token that uses a derivative to maintain a fairly stable value, the Uniswap decentralized exchange, and games with non-fungible tokens for player assets.
Re: SEC Charges Kik With Conducting $100M Unregistered ICO
#83Note that Kik has expressly stated that they have really wanted this case to go to court for some time now. They strongly believe that the SEC guidance so far has been vague and non-committal to the point of becoming damaging. They believe they have a case that Kin is not a security and that the Howey Test is being mis-applied to many cryptos. By going through with the suit they hope to fast-forward more concrete gui…
Doesn't everyone publicly look forward to proving their case in court when the inevitable legal battle is obvious? Not many folks say "Oh man I don't want the SEC to sue me, I'm gonna get creamed in court!"
If that was the case Kik wouldn’t have spent an alleged $5M unsuccessfully trying to settle this matter.
No most people don’t raise a $100M in violation of securities law...or even “testing” security laws, especially when Kik could have obtained the SECs opinion through a No Action Letter request.
Why didn’t Kik avail themselves to the law and process before raising $100M from the public?
Re: SEC Charges Kik With Conducting $100M Unregistered ICO
#84"The complaint further alleges that Kik marketed the Kin tokens as an investment opportunity. Kik allegedly told investors that rising demand would drive up the value of Kin, and that Kik would undertake crucial work to spur that demand, including by incorporating the tokens into its messaging app, creating a new Kin transaction service, and building a system to reward other companies that adopt Kin. At the time Kik…
> Who even bought this stuff? A buddy of mine from my home town called me up and needed a developer to work on his "crypto-currency hedge fund." This guy has always been a bit dodgy on looking for the least amount of resistance to the most money. I tried tell tell him all the reasons it was a bad idea. He claims he had done all the research (guy is not a programmer, couldn't pass Anatomy I the two times he took it in…
It's important to note that while this person seems, you know, not very smart, the laws against unlicensed securities exist precisely to protect this kind of person from getting themselves in trouble.
I'm no lawyer, but it certainly seems like Kik worked to circumvent these laws in order to raise a bunch of money to keep their business alive. I look forward to seeing where the SEC investigation/trial goes.
Re: SEC Charges Kik With Conducting $100M Unregistered ICO
#85The same Kik from the 2016 left-pad debacle on npm?
The same. Apparently that whole affair hasn't taught them anything.
Re: SEC Charges Kik With Conducting $100M Unregistered ICO
#86Earlier quoted context omitted.
Well a messenger app for 8 years, but that's not really what the lawsuit is about.
They want to add payments to their messenger app. That's a known business model and a hot area right now - WeChat pioneered it, Line does it too, and Facebook is working on a cryptocurrency-based solution that does the same thing.
The rewards could be huge if payments via messaging apps takes off in the west. It's really too bad WhatsApp sold to Facebook of all places.
We could have a privacy-oriented chat platform with a cryptocurrency "small cash" type of transaction system built on top. Combined with some informal craigslist style mini-stores, which flourished in China via Wechat.
I'm sure FB/WhatsApp could do it via normal payment channels, probably involving Visa/Mastercard. But the privacy story is awful for such a critical piece of software. Assuming they could pull it off. Maybe Kik could take up the privacy flag?
WSJ made a nice video of how Chinese people live "cashless" via WeChat in Shenzen: https://www.youtube.com/watch?v=75AXINUL47g
Re: SEC Charges Kik With Conducting $100M Unregistered ICO
#87Earlier quoted context omitted.
Doesn't everyone publicly look forward to proving their case in court when the inevitable legal battle is obvious? Not many folks say "Oh man I don't want the SEC to sue me, I'm gonna get creamed in court!"
If that was the case Kik wouldn’t have spent an alleged $5M unsuccessfully trying to settle this matter. No most people don’t raise a $100M in violation of securities law...or even “testing” security laws, especially when Kik could have obtained the SECs opinion through a No Action Letter request. Why didn’t Kik avail themselves to the law and process before raising $100M from the public?
Patrick Gibbs:
> First of all, you have to consider the SEC’s normal process for that sort of thing. It is very difficult and it takes a very, very, very long time for the SEC to give that kind of forward-looking advice, usually in the form of a no action letter. I mean, here we are in 2019 and they have only just recently released what I think is the very first no action letter relating to a cryptocurrency and that matter has been pending for well over a year.
> So it’s not practicable in a business that’s moving as quickly as this business was in 2016, 2017, to go and ask the SEC for a no action letter like that because the process just takes too long, and in a situation where in our view it’s quite clear that what we were doing is outside the scope of the SEC’s authority, we don’t generally think we have to go and ask the SEC’s permission to engage in business activity that is outside the scope of their authority.
https://unchainedpodcast.com/kin-sets-up-5-million-defendcry...
Re: SEC Charges Kik With Conducting $100M Unregistered ICO
#88So what happens to Kik now? Funding-wise, I mean. The press release says that: "the company’s management predicted internally that it would run out of money in 2017. In early 2017, the company sought to pivot to a new type of business, which it financed through the sale of one trillion digital tokens." I'm guessing that they spent a decent amount of the money they raised through the ICO. If they have to give it back,…
> If they have to give it back, will they have to take on even more funding from a VC at even worse terms? ... I think they are far more worried about being referred at this point. Who cares if you have try to pay back ICO investors? As long as you can stay out of prison, any terms are good terms. I suspect a good many people at Kik will be losing property they own, because this will definitely pierce the veil so to…
Why do you think this will pierce the veil? I don’t know the rules around that.
Re: SEC Charges Kik With Conducting $100M Unregistered ICO
#89"The complaint further alleges that Kik marketed the Kin tokens as an investment opportunity. Kik allegedly told investors that rising demand would drive up the value of Kin, and that Kik would undertake crucial work to spur that demand, including by incorporating the tokens into its messaging app, creating a new Kin transaction service, and building a system to reward other companies that adopt Kin. At the time Kik…
Honestly, that sounds a lot less scammy than nearly every other ICO out there. Kik is an established company with a social network product used by millions. Given their market position, I think their idea isn't totally farfetched. I could be missing some aspects that indicate it is a total scam, but just from that paragraph alone (which is all I know about the topic), I could see warranted interest from investors.
Look at all the payment integrations that've been added to platforms like Facebook lately. It isn't cryptocurrency, but the idea seems to be pretty similar.