Summary (IA Generated)
Much has been written about the Sept.
30, 2020, decision by Judge Alvin Hellerstein of the Southern District of New York in the U.
Securities and Exchange Commission vs.
In that order, the judge ruled in favor of the SEC’s motion for summary judgement, applying the Howey Test in the course of determining that Kik Interactive had violated the federal securities laws by selling contractual rights to acquire Kin tokens and later by issuing and selling the Kin tokens themselves.
Less has been said about the actual final judgement, entered by the court on Oct.
21, 2020, pursuant to an agreed-upon settlement reached by the parties.
The final order of judgement entered based on that settlement enjoins Kik and its agents and active participants in the original distribution who have actual notice of the order from various acts.
] That amount is minor in comparison to the approximately $100 million raised in the Kin offering.
) Kik did not have to return the rest of the amount raised, did not have to shut down the Kin network that was then in development, and was not required to register Kin with the SEC as a condition of moving forward.
] Given the determination by Judge Hellerstein that Kik’s sale of Kin in 2017 did involve the sale of securities, and the reality that the final judgement barred the sale of unregistered, non-exempt securities by both Kik and any of its agents who have knowledge of the order, it might be surprising to some that Kin is still being bought and sold.
] The reality is that the Kin ecosystem of today is remarkably different from the one that existed in 2017, when Kik was selling contractual rights to acquire Kin when issued (in the form of Simple Agreements for Future Tokens, or SAFTs), and when Kin tokens were initially issued on Sept.
] For Kik itself, and potentially for insiders and attorneys of Kik, the result might be different, although as this comment suggests, there is indeed a strong argument that Kin tokens today should not be treated as securities either as a matter of legal precedent or as a matter of good policy.