Two weeks ago, Judge Alvin Hellerstein, Federal District Judge of the Southern District of New York, ruled that Kik’s $100,000,000 token distribution event was an illegal issuance of a security — an unregistered securities offering — based upon his analysis of the Howey Test.
It is important to note that Judge Hellerstein’s ruling was on the SEC’s Motion for Summary Judgment, a preliminary action prior to the case being heard. A Motion for Summary Judgment requires there to be little or no disagreement on the facts and thus becomes a matter of the application of only the law.
It would be fair to say that the Judge saw the facts as being agreed by the warring parties and thus was able to opine solely on the law. This rarely happens as there is usually some fact that is in dispute.
This case was a much-watched case and was touted as an important bellwether crypto case.
It is, in reality, a disappointment in its lack of fanfare and grandeur, a yawningly predictable Howey Test case as many — myself included — said from the beginning. Yawn. Sorry.
The United States Securities and Exchange Commission made the noted charge whilst Kik denied that their issuance of “Kin” was an unregistered securities offering.
The parties now have until 20 October 2020 to thrash out some form of an agreement. Stay tuned, amigos.
Understandably, the SEC has the upper hand in this matter whilst Kik is in the unenviable position of negotiating whilst at a huge disadvantage.