Mobile messaging platform Kik says that the United States Securities and Exchange Commission (SEC) is twisting facts and taking comments out of context as apart of their ongoing lawsuit over the company’s 2017 token sale.
Kik is a global messaging app and platform that launched a token sale in 2017 which grossed more than $100 million. However, the SEC alleges that the startup’s token sale violated securities laws, and has enacted a lawsuit against the company.
In a 130-page filing released Aug 7, the Toronto-based messaging company refuted the SEC’s arguments, including the idea that their token sale was an unregistered securities offering. In addition, the company accused the regulatory body of manipulating the facts of the case and taking comments out of context.
Speaking with CoinDesk, Kik CEO Ted Livingston said that the SEC was “playing dirty” with the original complaint filed in June in an attempt to make the company “look bad.”
“What really surprised us is just what lengths the SEC went to twist the facts. They cut quotes and [took them out of context] and that’s something we didn’t expect from the SEC.”
According to the complaint, the SEC alleges that Kik offered unregistered securities in the form of kin tokens to US investors as a way to provide funds to keep the messaging platform afloat in lieu of other sources of revenue.
However, Kik claims that the public offering for kin was never about enacting a securities sale.
Instead of making a desperate pivot to crypto--as the SEC implies--the messaging company says they were considering the possibility of a token as far back as 2012. In the filing, Kik attorneys wrote that the SEC was being “highly selective and misleading” in its claim of an unregistered securities sale, which reflected the basis of their weak lawsuit.
The SEC complaint hinges upon comments made by Kik board members and executives that appear to show the company was in need of a token sale to stay afloat.
According to one quote, a board member wrote about the token sale:
“The more I think about it, I think this is a great idea. People call it a hail Mary but to me that is a longshot and I really do not think it is a long shot.”
Kik maintains that the comments were taken out of context, and does not provide sufficient evidence for an illegal securities sale.