Kik and the U.S. Securities and Exchange Commission (SEC) have proposed settling their dispute over a 2017 token sale with a $5 million fine.
The proposed joint settlement, which also enjoins the Canadian firm against future U.S. securities law violations, still needs approval from presiding judge Alvin K. Hellerstein, according to public court documents. If approved, the settlement would cap off a year-long legal fight between the two.
Kik must give the SEC 45 days notice on any actions it undertakes with its Kin token treasury, but the filing did not hint at what could be in store for Kik’s 3 trillion Kin. CEO Ted Livingston declined to comment.
A similar lawsuit filed by the securities regulator against messaging platform Telegram saw that firm’s blockchain project, the Telegram Open Network, abandoned before it could launch.
Kik originally announced it hoped to fight the SEC in court, potentially creating a precedent for how token sales might be treated under U.S. securities law. However, it backed away from a jury trial request in March, and lost a motion for summary judgement last month.
At the time, a judge ruled that Kik’s issuance of Kin was an investment of funds in a joint enterprise that sought to boost the token’s price, satisfying the prongs of the Howey Test, a Supreme Court case used as a precedent for evaluating whether assets are securities.
Kik General Counsel Eileen Lyon said the SEC should create clear rules for the crypto industry, rather than publish “conflicting statements” and other non-binding forms of guidance in September.
