ICO Aftermath: US Rules in Favour of SEC in $100M KIK Case – SALT to Reimburse Claimants From 2017 ICO
A US court has ruled in favour of the US SEC after the regulator’s filing of a motion seeking summary judgment against Kik for violating the country securities laws. Kik, which raised $100 million from 2017 ICO, had filed its own motion of summary judgment but the court refused to grant this.
In his judgment, US District Court Judge Alvin Hellerstein agrees with the US SEC’s contention saying “undisputed facts show that Kik offered and sold securities without a registration statement or exemption from registration, in violation of Section 5.”
In a suit filed on June 4 2019, the SEC sought the court’s relief “in the form of an injunction barring Kik from violating Section 5(a) and Section(c) of Securities Act, disgorgement of ill-gotten gains and financial penalties.”
On the other hand, Kik, which raised $50 million on the last day of a its pre-sale (September 11, 2017), filed a Form D with the SEC claiming this particular fundraising was exempt. In denying the allegations, Kik asserts “as an affirmative defence that the definition of an ‘investment contract’ is void for vagueness as applied to Kik.”
Still, the court ruled against it and subsequently ordered both parties “to jointly submit a proposed judgment for injunctive and monetary relief.”
Salt’s 2017 ICO Also Found to Violate the Securities Act
Meanwhile, in a different case, the SEC has secured an undertaking by Salt Lending Inc to reimburse investors that participated in the June 2017 token offering that raised $47 million. The regulator had similarly charged that Salt “violated Sections 5(a) and 5(c) of the Securities Act by offering and selling these securities without having a registration statement filed.”
However, “in anticipation of the institution of these proceedings,” Salt Lending Inc instead submitted an Offer of Settlement which the Commission has determined to accept.”
Meanwhile, the US regulator explains in the cease and desist order why it accepted Salt Lending Inc’s offer:
“In determining to accept the Offer, the Commission considered remedial acts undertaken by Respondent, including the fact that Salt returned several million dollars to investors and cooperation afforded to the Commission staff.”
Still, Salt Lending Inc is expected to issue a press release that notifies the public about the cease and desist order. In addition, the company must register the tokens as a class of securities.
More importantly, the company must inform “all persons and entities that purchased Salt Tokens from Respondent before and including December 31, 2019, of their potential claims under Section 12(a) of the Securities Act.” The order concludes:
Respondent shall, within ten (10) days of the entry of this Order, pay a civil money penalty in the amount of $250,000 to the Commission for transfer to the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(2). If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717.
Meanwhile, the SEC is expected to continue enforcing provisions of the Securities Act retrospectively as it seeks to assert its position. However, it remains to be seen if the regulator can successfully enforce the provisions of the law with respect to Defi tokens.
What do you think the SEC’s latest judgments? Share your thoughts in the comments section below.
The post ICO Aftermath: US Rules in Favour of SEC in $100M KIK Case – SALT to Reimburse Claimants From 2017 ICO appeared first on Bitcoin News.