A court has approved the settlement between Kitchener-Waterloo messenger app Kik and the US Securities Exchange Commission (SEC), which was proposed earlier this week. A statement issued by Kik Wednesday claimed the approval resolves “all ongoing matters” between Kik and the SEC.
“The SEC offered settlement terms that allow us to put this behind us and focus on our mission.”
Per the final judgment issued Wednesday, Kik will pay a one-time fine of $5 million USD to the commission within the next 30 days. For the next three years, Kik is also required to provide notice to the commission before engaging in enumerated future issuances, offers, sales, and transfers of digital assets.
“This has been a long, expensive, and public battle between Kik and the SEC. Although we respectfully disagree with Judge Hellerstein’s analysis in his ruling and were prepared to pursue an appeal, the SEC offered settlement terms that allow us to put this behind us and focus on our mission,” Kik said in its statement. “We look forward to an exciting future for the Kin Ecosystem and the millions of mainstream consumers who earn and spend Kin every month.”
For the last three years, Kik and the SEC have been embroiled in a legal battle over Kik’s 2017 initial coin offering (ICO) involving the Kin cryptocurrency, which began as a cryptocurrency token issued on the public Ethereum blockchain through Kik.
The approval of the settlement follows shortly after the US District Court for the Southern District of New York ruled in favour of the SEC, which claimed that Kik Interactive Inc. violated securities law by failing to register the 2017 distribution of its Kin tokens.
The SEC’s pursuit of Kik led to the initial shutdown and sale of Kik’s app, in addition to the acquisition of its employees in 2019.
In its Wednesday statement, Kik said the settlement does not require the registration of the Kin token as a security with the SEC. According to the final judgment, Kik does not need to seek the commission’s approval or consent prior to issuing, offering, selling, or transferring cryptocurrencies.
Kik has waived any right to appeal from the court’s final judgment.
“Issuers seeking to use the public markets to capitalize their businesses may not evade the registration requirements of the federal securities laws,” Kristina Littman, chief of the SEC Enforcement Division’s cyber unit, said in a statement. “The court’s decision recognized that Kik was engaged in a single, illegal offering of securities.”