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Crypto-lawyer, Jake Chervinsky has created a Twitter AMA, giving his opinions on the latest in the ongoing Kik/SEC saga.

Yesterday came news that the Securities and Exchange Commission (SEC) is officially suing Kik over their alleged illegal securities sale. So it looks like Kik (and CEO Ted Livingstone) will get its (purportedly craved) day in court.

With too much to include in one thread, ever reliable crypto-lawyer, Jake Chervinsky, decided to try an AMA (ask me anything). Here are some of the most interesting queries and his responses.

The SEC has plenty of time to bring suit against other players after this case is resolved. They're in a better position litigating the core Section 5 question against Kik and, if they win, using it to leverage settlements from anyone else who might be liable. Simple is better.

— Jake Chervinsky (@jchervinsky) June 4, 2019

Starting with the very basics; some wanted to know what Kik was accused of, and why they, in particular, was getting sued.

The SEC alleges that Kik sold a security–Kin tokens–to US investors without first registering them… or qualifying for an exemption from registration. Kik got sued (unlike the other ICOs) because it basically dared the SEC to sue.

Some argued that this was Kik’s own fault for not following the guidelines.

What guidelines? The whole reason Kik is taking this case to court is because, in their view, the SEC never explained how it would apply the Howey test to ICOs until long after their token sale was over (and, perhaps, still hasn’t adequately done so).

In response to the question of whether Kik can save itself, Chervinsky replied, “Sure, why not?”

Somebody else then suggested that Kik could save itself by simply settling the ICO complaint. After all, it makes no mention of the current status of Kin, he argued.

Possible, but I’m guessing if they were going to settle the initial token sale, they would’ve done so by now. Maybe they’ll revisit settlement after meaningful developments in litigation, like if their motion to dismiss gets blown out of the water (or is partially granted?).

Somebody asked why the SEC had felt the need to highlight its belief that the ICO was a desperate raise to keep them in business? Was is this important? Aren’t most capital raises like that?

It doesn’t matter if Kik was desperate or not. I think the SEC only included that material in the complaint to make a point: they aren’t going to play nice.

One poster asked, “If Kik wins the case does that mean that other ICOs go scott free?”

Almost certainly not. Best case scenario for ICOs is a court order saying digital tokens aren’t securities (unlikely). If that happens in the District Court, it’s just one opinion that other courts can ignore. It’s actually better for ICOs if Kik loses at trial & wins on appeal.

When asked who the SEC were likely to pursue next, Chervinsky responded that it was unlikely to pursue anyone whilst this case was pending. The outcome could affect the rest of the crypto-verse thus:

In a lot of ways. Mostly, it could help clarify how the Howey test applies to ICO tokens. Do they create a “common enterprise” just because everyone owns the same token? Do they qualify as currencies exempt from securities laws? It’s a big step toward cleaning up the ICO mess.

Obviously, this is all just professional opinion from Chervinsky. We will just have to wait and see what the eventual fallout of this ongoing dispute leads too.

What do you think will happen with Kik vs. The SEC? Share your thoughts below!

Images via Shutterstock

The post How Might SEC vs. Kik Play Out In Court? – A Lawyers View appeared first on Bitcoinist.com.

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