The United States Securities and Exchange Commission (SEC) recently filed a lawsuit against the KIN cryptocurrency project for allegedly selling unregistered securities. KIN is a project put together by the social messaging app Kik and raised funds by selling KIN tokens between May and September 2017 to fund the project.
The lawsuit states that Kik sold one trillion KIN tokens to the value of approximately $100 million, half of which were to U.S. investors who were not given proper disclosures required by federal securities laws.
Kik CEO Ted Livingston now claims the company will fight back against the lawsuit in a press release that claims the KIN token is not a security. In the release, Livingston says the company welcomes “the opportunity to fight for the future of crypto in the United States.”
SEC Loosening Laws on Crypto
The news follows a report last month that the SEC was softening its stance in relation to cryptocurrency projects, specifically those that operated without correct compliance procedures.
An announcement from the SEC Director of Corporate Finance William Hinman stated that the agency will issue letters of “No Action” to crypto projects that now have a viable use case despite selling tokens without a license.
However, it clearly states that projects that continued to issue tokens after the SEC issued its DAO Report of Investigation in July of 2017 will still be liable to prosecution for illegal sales.
Does KIN have a viable use case?
Despite its lack of listings on crypto exchanges, Livingston insists KIN is being “used by more people in more apps every day, and come the trial, Kin may be the most widely used cryptocurrency in the world.”
The KIN token does have quite a high rate of transactions as it is being used as a type of reward to users of the Kik family of apps, which covers quite a large user base. Despite this, the token, which is currently due for migration from the Ethereum blockchain to the Stellar blockchain, has dropped in value by almost 30 percent following news of the SEC’s lawsuit.