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SEC Charges Kik for conducting a $100 Million unregistered ICO Ken Chigbo Ken Chigbo FXStreet Follow

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  • The SEC has charged a Kik for a $100 million ICO which was not registered with the U.S. securities laws.
  • Kik financed its new type of business back in early 2017 via the sale of one trillion digital tokens.

 

U.S. regulator, the Securities and Exchange Commission has taken action and sued Kik Interactive Inc. for conducting an illegal $100 million securities offering of digital tokens.

The SEC has charged Kik for selling the tokens to U.S. investors without registering their offer and sale as required by the U.S. securities laws.

Within the SEC’s complaint, Kik had lost money for years on its sole product, an online messaging application. The management of Kik had forecasted that it was going to run out of funds in 2017. Kik had sought to pivot a new type of business early in 2017. It was financed via the sale of one trillion digital tokens.  Kik sold its “Kin” tokens to the public, and at a discounted price to wealthy purchasers, raising more than $55 million from U.S. investors.  The complaint alleges that Kin tokens traded recently at about half of the value that public investors paid in the offering.

 

source..fxstreet

SEC

SEC Charges ICO Operator Who Used Alias After Past Conviction

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The U.S. Securities and Exchange Commission charged CG Blockchain Inc., BCT In. SEZC and their opera

tors Boaz Manor and Edith Pardo with fraud, alleging he raised $30 million through an initial coin offering (ICO).

The SEC alleged in a press release Friday that Manor hid a past criminal conviction by working under an assumed name, passing himself off as an employee of Pardo’s to raise funds for BCT. As part of this effort, Manor allegedly “darkened his hair [and] grew a beard” out of concerns his actual identity might be toxic to the company.

In a statement, SEC Market Abuse Unit co-chief Joseph Sansone said investors should always learn about the identities and backgrounds of those raising funds.

“As alleged in our complaint, Manor’s brazen scheme to conceal his identity and criminal history deprived investors of essential information and allowed defendants to take over $30 million from investors’ pockets,” he said.

The U.S. Attorney’s Office for the District of New Jersey filed parallel criminal charges against Manor and Pardo, the SEC said.

Manor raised funds in 2017 and 2018 to build out a “Blockchain Terminal,” a crypto-version of the famous Bloomberg Terminal, according to a 2018 article in The Block.

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SEC Warns Crypto Investors of Initial Exchange Offerings in New Note

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The U.S. Securities and Exchange Commission published a new warning against initial exchange offerings (IEOs) Tuesday.

According to the notice, IEOs are similar to initial coin offerings (ICOs), many of which the agency has been investigating as unregistered securities offerings over the past several years. While IEO providers may claim their sales are different from ICOs, they may still violate federal securities laws, the SEC said. As such, the agency warned investors to “be cautious” if they are considering investing in an IEO.

“IEOs

are being touted as an innovation on ICOs because they are offered directly by online trading platforms on behalf of companies – usually for a fee – to provide immediate trading opportunities for the digital assets,” the notice said.

However, the SEC took aim at crypto exchanges directly, noting that they “are typically not registered with the SEC,” and “may improperly refer to themselves as ‘exchanges.'”

The SEC warned that a platform saying it is registered does not necessarily mean it actually is registered with the agency, and it emphasized that “there is no such thing as an SEC-approved IEO.”

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Hamstringing an Industry With Compliance Costs

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Between Kraken’s $1 million spend on subpoena responses in 2019 and stories like the $2 million it cost Blockstack to raise $23 million in an SEC-compliant token sale (8.7 percent of the raise), it begs the question: Will compliance costs fundamentally limit innovation by demanding big war chests to play? Will the most successful companies be those that (like Block One) simply raise enough to pay off the regulators on the back end?

Later, we look at new mining interests in Texas, what it means for American mining and bitcoin mining in

the lead up to the halving more broadly. Finally, we’ll dissect an op-ed from the IMF’s chief economist on the strength of the dollar over digital alternatives. 

Topics discussed 

Kraken annual transparency report shows off growing regulatory inquiries and increasing cost of compliance

Related Article: Law Enforcement Data Requests Rose by Almost 50 Percent in 2019, Says Kraken

New global interests in giant Texas-based bitcoin mining operation

Related Article: SBI, GMO to Rent Capacity at Massive Bitcoin Mine in Texas: Report

The IMF’s chief economist on why digital currencies don’t threaten the dollar’s global reserve currency status

Related Article: Digital Currencies Won’t Replace US Dollar Any Time Soon: IMF Chief Economist

source:coindesk.

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