The Securities and Exchange Commission (SEC) filed a lawsuit against Kik Interactive for allegedly conducting an unlawful initial coin offering (ICO) in 2017.
Kik is a private company based in Canada. It is the owner and operator of a mobile messaging app called Kik Messenger.
Allegations against Kik Interactive
In the complaint, the SEC alleged that Kik offered and sold one trillion unregistered digital tokens called Kin from May to September 2017. The ICO was part of its strategy to keep its business operations afloat. The company raised $100 million in funding from investors, who were not aware of its financial problems.
According to the Commission, the company’s action was a violation of the Securities Act of 1993 because its investors did not receive the required disclosures related to the ICO.
Under the law, companies offering and selling securities must provide investors with accurate and sufficient information to allow them to make an informed decision before investing. Companies normally disclose relevant information related to the securities offering in a registration statement with the SEC.