RT @ted_livingston: Our response to SECs filing: https://t.co/cA8E9n5oTT To summarize: they have backed off commenting on anything about how Kin is being used today, they have flawed legal arguments on the original Kin sale, and they are bending the facts to tell a story that is grossly misleading
The vote hasn't been published yet, probably within a week or so. I am also really interested to see how Peirce voted.
Remember about this u/dill0n? “I'd say both of you are off the mark with the full extent of this conversation :p u/Polype01 u/dill0n
But I will zoom in to clarify a few things...
There does exist two Canadian corporate entities as anyone can publically verify with the Government of Canada's website
Kik Interactive Inc. https://www.ic.gc.ca/app/scr/cc/CorporationsCanada/fdrlCrpDtls.html?corpId=8915121
Kin Foundation https://www.ic.gc.ca/app/scr/cc/CorporationsCanada/fdrlCrpDtls.html?corpId=10402320
However, employee headcount (aside from directors of each) are technically employed by Kik Interactive Inc.
However, in practice, the employees in the Tel Aviv office are all organized under the Kin Business Unit
and all the employees in the Kitchener/Waterloo office are organized under the Kik Messenger Business Unit.
Both BU's, in practice, interact with each other and the outside world as separate companies. They each have their own finance team, HR department, google apps for business accounts (email, etc), slack, JIRA boards, and all the other good stuff a separate company might have. I'm not aware of any plans on if this change in the future but since these business units were formed shortly after Kin was first announced they've been clearly getting further and further down the path of being separate entities.”
The lawsuit is for the sale of an unregistered security. The kin foundation never sold kin, so it would not be within the scope of the lawsuit. Kin is clutching at straws trying to sell this as a positive, it is just the factual reality. Even the wells notice says the SEC was considering the kin foundation, but does not state with what charge. It is common that at early proceedings you review all related entities. That does not mean kin is not a security, it is just that there is nothing to charge kin foundation with.
Let's all remember that it's more important than ever to remain active on social media and to continue to educate people about the project. I'm seeing a lot of people that believe Kin is a scam - this news doesn't paint a great picture to prove otherwise.
« However, after reading our Wells Submission, the SEC chose not to name the Kin Foundation or assert any claims based on Kin transactions occurring after Kik's 2017 pre-sale and token distribution event. In our view, the SEC's decision not to bring such claims acknowledges that the transactions currently taking place within the Kin Ecosystem do not fall under the federal securities »
The big deal here (one of several) is that the Kin Foundation has been dropped from the SEC lawsuit. Only Kik Interactive is being sued. Kin Foundation itself is not named, and is no longer a participant in the suit.
Eileen Lyon, Kik's General Counsel commented, "It is noteworthy that the November 2018 Wells Notice was addressed to both Kik and the Kin Foundation. However, after reading our Wells Submission, the SEC chose not to name the Kin Foundation or assert any claims based on Kin transactions occurring after Kik's 2017 pre-sale and token distribution event. In our view, the SEC's decision not to bring such claims acknowledges that the transactions currently taking place within the Kin Ecosystem do not fall under the federal securities laws."
If you can't see how big THAT is, let's get you some eyeglasses!
KIN and KIK are one in the same. KIN is KIK’s 3rd iteration of a token or point scheme for their chat app. Ted manages his resources like a child, and it shows. It’s over. KIK is not becoming the Wechat of the West. Wechat will be the Wechat of the West.
Source that, please. I've never read that from anywhere substantive.
If that were true, I don't see it making a difference; I don't think it's true.
What is true is that the Kin Foundation is not legally connected to Kik Interactive. It is a stand-alone entity with no financial connection to Kin. That's not in dispute.
Hi, you can read it in the comments.
Please let me know what you think. I appreciate your point of view.
Yeah, I remember that exchange. Dillon wanted to keep pressing that Kik controlled KF, while Brian specifically didn't say that. It's a good bookmark for the reality that Kik and Kin are two separate entities.
I'll bet anyone a beer and a donut that any lingering connections (employee/headcount, etc) between Kik and Kin will start being severed soon, if they hadn't been already, to the extent allowed by law.
I have a feeling u/Ted_on_Reddit has been preparing his business entities for this contingency for a while. I have zero doubt that Kin and Kik are as separated as they need to be to weather this storm.
I completely agree with you, but as far as i understand all Kin foundation employees are on the Kik payroll. The SEC maybe doesn't have to mention the Kin foundation because for them they are one and the same.
This is sugar coating majorly. Kin Foundation is essentially a subsidiary of Kik. They are all on Kik payroll. If the SEC wins against Kik they basically win against Kin Foundation and take them down too
Kik Interactive and the Kin Foundation are two separate legal entities. Kik is a for-profit business, the KF is a not for profit Foundation. Kik may have started the KF, but it does not own it, it is not a subsidiary of Kik, and while there was an initial grant from Kik that kickstarted the Kin Foundation, there is no legal or financial connection between them.
Those are factual statements. No sugar coating.
Why do you think they did that? Because they each wanted to protect the other in the event one of them was financially or legally attacked. It's very common for businesses who start new enterprises to do this. It's why lawyers have jobs, and it's very very common for businesses to do this in setting up other businesses.
See? I can see you're starting to see it.
It's like a gecko losing it's tail to the predator... the tail wriggles and stay behind while the wily little Gecko scampers away to create mass adoption. It'll grow another tail, soon... but it lives to fight another day.
Per the SEC filing, isn't their stance simply that the ICO was not registered as a security with no stated issues of Kin after the ICO?
>"The SEC charges that Kik sold the tokens to U.S. investors without registering their offer and sale as required by the U.S. securities laws. "
The below appears to outline a strong case that Kin was a security ONLY before and during the ICO, not after. Thus it should have been registered as a security.
> The complaint further alleges that Kik marketed the Kin tokens as an investment opportunity. Kik allegedly told investors that rising demand would drive up the value of Kin, and that Kik would undertake crucial work to spur that demand, including by incorporating the tokens into its messaging app, creating a new Kin transaction service, and building a system to reward other companies that adopt Kin. At the time Kik offered and sold the tokens, the SEC alleges these services and systems did not exist and there was nothing to purchase using Kin.
Would it be a surprise if Kin loses this one and the SEC still provides clearer guidelines on securities?
What is Kin's argument in this scenario?
Would the SEC have eventually gone after Kin for these charges had Kin not forced the issue? (It also seems a little personal with the SEC mentioning Kik's finance situation, unless to build a case of rushing to an ICO due to desperation for money? In any case, it would appear that Ted yet again proves he's good at getting under peoples skin)
Will this set precedent for all other potential security ICO's (it seems the SEC has already charged 5 other coins with similar complaints)?
Or can the SEC pick and choose who they go after, stating some ICO companies had better intent than others (or some such reason...)?
I feel like i'm missing something here...
You keep saying "Kin" when you mean "Kik." And that's pretty common.
Kin and the Kin Foundation are not being sued. The KF resides in Tel Aviv, Israel, and is not being sued by the SEC. Kin, as a cryptocurrency, isn't in jeopardy. The big drop today is because of the same mistake that you just made--equating Kin and Kik-- is also being made by many others.
Kin is free and clear, unfettered by the SEC. Indeed, the Kin Foundation is not within the SEC's jurisdiction. The US just slammed the door for future innovation, and shot itself in the foot by attacking Kik Interactive.
Kik is in the right and will probably win, in my layman's opinion.
But what happens if they don't?
Here's a thought. If Kik sees it is losing the legal battle, Kik might then "gift," transfer or otherwise conveys all the Kin it owns to the Kin Foundation... perhaps even "sells" it at a low price. Kik then files for bankruptcy protection and ceases operations. What's left of the company is chopped up and sold off to pay the SEC's fines.
Perhaps Kik even sold it's messenger operation to a third party, who continues to integrate Kin into Kik in the way Ted envisioned years ago.
Without the 18 months wrangling with the SEC going forward, the KF is free to innovate, partner, onramp exchanges, etc, and fulfills it's plan of becoming the world's leading micro transaction blockchain.
Really, yes, this is how I see it. It doesn't matter what happens to Kik... Kin is free and clear to move forward.
Ted Livingstone and his lawyer outline their arguments in a recent Unchained podcast ( [https://unchainedpodcast.com/kin-sets-up-5-million-defendcrypto-org-to-take-on-the-sec/](https://unchainedpodcast.com/kin-sets-up-5-million-defendcrypto-org-to-take-on-the-sec/) )
Basically a company selling an asset and investors buying it with the expectation that the asset will rise in value in the future due to higher demand does not automatically make the asset a security. For example: real estate.
No, not true. There are plenty of instances where the seller can have plans to improve infrastructure, but make no promises as to what are when he's going to do that. Happens all the time in real estate; your property may increase in value due to the people who sold you building the area around your property, but that does not make your land a security.
A security is a security. There was no promise of profit, no fiduciary duty from Kik *or* Kin to provide you with profit or business partnership or anything of the sort.
No crypto is a security. Some cryptos are scams, however... and this is a direct example of Government overreach being used to destroy legitimate business instead of prosecuting wrongdoers.
I want to know--WHERE WAS THE SEC WHEN BITCONNECT WAS SCAMMING MILLIONS OUT OF the unsuspecting public???
Yet, here they are, attacking a truly groundbreaking, legitimate project.
Screw them. We're moving forward.
I was in some deep thinking about this last night. You know, removing the KF from lawsuit could be a checkmate for SEC towards kik. I have to assume that during all of the talks kik/sec had that the very easy solution of them admitting they sold unregistered securities, paying a fine and then moving on their way with the new non-security had to have been bought up? If it wasn't, why are we assuming that is what they are saying now in the actual lawsuit?
I think the sec did leave out the kf on purpose, but for what reason I am not sure. It's possible they want Ted to admit , very publicly, a loss and that kik did offered unregistered securities for sale. If he does this, then kf is free to go on it's way possibly. Still brings me back to why this wasn't offered during talks and the only thing I can come up with is that it was and kik didn't want to admit and have to return the money.
I think that Kik plans to fight and to win. I also am confident that the Kin Foundation is now pretty safe from SEC legal action. After all, did the KF offer Kin in an unregistered ICO? Nope. Kik created KF to administer and nurture the Kin Ecosystem, that's it. Is Kin a security? Obviously not. Demonstrably not. Kin is a vibrant and growing cryptocurrency in an expanding ecosystem.
Kik has a good shot at winning. But even if it loses, there are paths to take, and the Kin Foundation isn't affected in any event. Kik might pay a fine, divest some of it's held Kin, or even be forced to pay some ICO/TDE people back.
And what happens if Kik can't do those things or pay those fines? Bankruptcy... while the Kin Foundation sails into the sunset.
And paying back those TDE participants... what if the price is above the TDE price? Hmm. No one will send their Kin back if they get less than the coin is currently worth. And no one paid USD for their Kin on the TDE, they paid in ETH. Do they get ETH back? Same amount they paid, in ETH?
Lots of questions. But first, Kik has to lose. They haven't yet, and very possibly will not. We'll know in one to two years.
Hey, je3851, just a quick heads-up:
**publically** is actually spelled **publicly**. You can remember it by **ends with –cly**.
Have a nice day!
^^^^The ^^^^parent ^^^^commenter ^^^^can ^^^^reply ^^^^with ^^^^'delete' ^^^^to ^^^^delete ^^^^this ^^^^comment.
So, essentially it's like - once Kin was a security, but no longer is... Now, all the SEC can do, is try to make an example out of Kik for selling a security (to eliminiate ICOs), but refuse to define whether or not Kin is a security or a currency. Sidestepping it is the best they can do!
"So, essentially it's like - once Kin was a security, but no longer is..."
You mean like how 3 out of the 4 heads of the SEC said that BTC and ETH were no longer deemed securities due to sufficient decentralization? If the SEC has only a "general sense of decentralization" yet can definitively state how the BTC and ETH are now decentralized now, just how did the SEC come up with that "sense of decentralization." And now that we're on the topic why can't it be applied to the KIK and its venture with KIN? We all know the KIN venture would not have happened without the KIK venture as KIK bankrolled KIN.
SEC doesn't decide, declare or confer "currency status" on anyone or anything. The SEC initially listed both the Kin Foundation and Kik Interactive with the Wells announcement. Today, after reading the wells submission in response, they filed suit, against Kik Interactive alone. The two are intimately interconnected, as we all know... and the SEC declined to pursue action against Kin.
What this means is that they will attempt to make Kik into an example, while allowing Kin--obviously no longer a security if it ever actually was one-- to continue to build and grow.
This is actually really, *really, REALLY* good news. I believe it's the turning point for Kin.
This is just my opinion, and hey, I'm not always right... but damn, I wouldn't bet against me this time. I just wouldn't.
I reloaded my bags at $0.000017-18-19 earlier today. Not investment advice, but I did this based on everything I've learned about Kin over the last two years, and especially about everything I have seen today.
The foundations of Kin are as strong as ever. The attacks have come... and have been found wanting. Kin is now unfettered, and able to move without hindrance.
Standing by for incoming, and for the big show.
At first, I think that was true. I don't think that's true anymore.
The truth is we don't know the financial structure of the Kin Foundation; but what we do know is that the founders of the project went to great pains to separate Kin from Kik. Kin is not "Kik Coin," and never has been.
, the SEC chose not to name the Kin Foundation or assert any claims based on Kin transactions occurring after Kik's 2017 pre-sale and token distribution event
But they are still saying it's a security then AND now, so not sure how attorney came up with this slant
No, they aren't. They are specifically NOT saying that. In fact, the entire lawsuit is now against ONLY Kik Interactive, alleging that the company illegally sold Kin as a security. They are not alleging anything at all about Kin being a security today.
Read it and reap the bennies.
(edit: clarity and spelling)
It seems like that, but I just don't know where/how that pertains to kin trading today. If you are lets say holding tokens from the ico in one wallet, never moved them then you are still holding the original security issued. I'm not sure how this goes we'll see it play out next few days
Here's the gist. Kin isn't connected with Kik anymore, and the lawsuit does not mention or involve the Kin Foundation. Kin, and the foundation that is building the ecosystem, are not party to the SEC enforcement action--this means that the KF is free to build and create and do everything it had already planned to do and create.
Kin is beyond the SEC.. past it. And moving forward.
Kik Interactive will fight and will probably persevere in the fight, several years from now, but it truly doesn't matter in the big scheme of things. Kik could disappear from view and Kin would live on.
I believe that the SEC lawsuit is without merit, and will be won by Kik in the long run. But I know that Kin isn't involved, and that means our little world-encompassing crypto project is about to go big time.
Seriously... I am more bullish right now than I have ever been. My money is where my mouth is, too.
Soo... you're saying Dawn Soap was a not for profit foundation, based in Tel Aviv, dedicated to the creation and growth of an ecosystem that people around the world could use to earn and spend Dawn Soap, a crypto-soapy currency traded on exchanges? Since BitSoap isn't a security, why would Dawn Soap be one? Maybe we shodl ask Soaptoshi Niveamoto what he thinks.
Sorry to burst your bubble, but your analogy just won't wash. Have an awesome day, though.
(Edit: Dawn Soap is a product, not a legal entity, as is the Kin Foundation)
Let's keep the right perspective - this is only a chink in the SECs armor if the judge and jury in the SDNY agree with Kik's interpretation of the law.
The SEC has laid out their side of the argument, Kik will lay out theirs, and the court will arbitrate. Most likely, neither side's version of the facts will be accepted wholesale. Also, you can have the best defense in the world and the jury of your peers could still find you guilty.
In the meantime, let's see the opinion of the lawyers who don't have a horse in the race.
I agree this case will be resolved somewhere in the middle. The SEC wants KIK to pay all the ICO investors back plus penalties. KIK thinks they owe nothing at all. End result: KIK pays some investors back and reduced penalties.
>judge and jury
Exactly. A company (KIK) that is trying to build a company (KIN) that is an umbrella for app's like "Pause For" which asks you to pause your phone for a minute so you can give to someone one in need. There are many app's that are being developed under the KIN's umbrella but KIN couldn't do it without KIK's participation. It was a symbiotic relationship born of need and the desire to survive in a hostile (snap and fb) world.
Fast forward to the trial with 12 people in a jury. The government (SEC) vs the people (KIK). Who do you think is going to win?
The SEC walked into a trap. Then again maybe they did so on purpose for clarity from Congress. Remember the SEC only expresses itself due to US Congress. Let me repeat myself. US Congress dictate law and regulation's to the SEC *NOT* the other way around, IIRC. Congress has been lax in its understanding but has bipartisan (Republican and Democrat) support on both sides which if presented properly should break the stalemate in regards to the SEC's lack of understanding of KIK, KIN, and the nature of crypto currency as a whole.
I don't know who's going to win. The case is complex and the jury does not historically side with the defendant just because the plaintiff is the US government.
The jury's role is to decide whether or not the defendant is guilty of breaking the law. Think of a case in which you were selected for the jury, because you don't have a pre-existing bias to either side. Would you reach your verdict because of a moral opposition to the government, or based on your understanding of the facts as they pertain to the two interpretations of law that were presented to you?
The government wins all the time, man. The jury is not going to have the same perspective on the world that you do.
"Would you reach your verdict because of a moral opposition to the government, or based on your understanding of the facts as they pertain to the two interpretations of law that were presented to you?"
Have you sat on jury duty? The dregs of life sit in the box. Not only will they not understand most of the intricacies of crypto or this case but they *will* most likely understand the emotional content both sides will weave and spin... The SEC is already taking an emotional approach character assassinating KIK's position... This is big govt. vs little guy. And most of the SEC's position is only based attacking KIK but KIK is only trying help" an app called KIN which is built by the people for the people." This is part of the emotional hook for the jury.
KIK should have the narrative of big govt. vs the little people in this case. This is the angle that will win the case if in fact it even goes to trial. The SEC might very well see KIK final statement before going to court and back off. If KIK's attorney's can present its case in simple terms why as to why KIK is supporting the underdog (the people) and build and app like KIN which is about all colors and creeds, then the case shouldn't last long. Jury's just want to get back to their PAID job. You do not get paid to be on a jury they actually lose $$ every day by being on the jury...
NOTE: If this were to happen KIN's page will be viewed by the jury eventually, and the main picture must show diversity NOT just a ring of white Israeli arms holding hands, FFS... :/ KIN and KIK need to think work together to survive this..
Agreed. Regardless this is hopefully one of many chinks. If we are able to tear down pieces of the SECs response, there is a higher percentage of success.
Have there been lawyers commenting without a horse in the race?
>SEC is in on it...
Maybe this is a subtle nudge to Congress, "Hey were the SEC! Remember us?! You had us write this law back in 1934 but is no longer pertains to the current environment due to the evolution of this stuff called, 'cryptocurrency.' We need you to, "OK" an Act that will allow crypto to be deemed a currency..."
Hey dill0n, quick question if you have the time. We keep hearing about how if a token becomes decentralized enough it may no longer be deemed a security. Do the node partners eventually being revealed help in this regard? Did the SEC take the nodes into account to begin with? Just woke up so haven’t given the SEC pdf a read yet.
Thanks for your input, or any one else who may answer.
I'm sure the node operators are well-known to the SEC at this point. But it seems to be irrelevant to the suit at this point- the questions are:
1. Is Howey applicable to a token like Kin?
2. If today's Kin token is not a security, does that apply post hoc and protect Kik from an unregistered sale of what was once a security?
2b. If not, what fines and refunds will Kik be on the hook for, and will they have the funding afterwards to continue?