SEC Claims ICO Is Unregistered Securities Offering

On June 4, 2019, the Securities and Exchange Commission (the “SEC”) filed a claim in the District Court for the Southern District of New York alleging that the Initial Coin Offering (the “ICO”) of Kik Interactive Inc. (“Kik”) was an illegal unregistered securities offering.  From May 2017 to September 2017, Kik raised about $100 million through the sale of digital tokens in an ICO which proceeds it said would be used to build a platform on which the tokens could eventually be employed.  The tokens were sold through contracts called the “Simple Agreements for Future Tokens” (or “SAFTs”). The SEC issued the so-called “DAO Report” while the Kik offer was being made, and made clear that ICOs of this type would be considered by it as securities offerings.