Based in New York City, Katherine is an early-stage investor at Notation Capital. Her interests are in crypto, tech, law, and other areas of her life that she finds interesting.

The 130+ page Annotated Guide to Kik's answer to the SEC's complaint

The 130+ page Annotated Guide to Kik's answer to the SEC's complaint

Yes, you read that correctly. If wading through over 130-pages of a legal answer to a complaint sounds like fun to you, I GOTCHU.


For those who need some more context: two months ago (June 04, 2019), the U.S SEC officially announced that it was suing Kik Interactive Inc. for conducting an illegal $100 million securities offering of digital tokens. The SEC dropped a scathing complaint against Kik— which you should skim to refresh your memory in order to better read this answer. You can find that original complaint here. It’s also annotated :)

My quick thoughts:

The original SEC complaint against Kik was honestly super damning and did not read well. My first thought after reading the answer is— damn, those lawyers REALLY went after it. Usually, answers don’t go into this much details. But in this answer, they actually went in LINE BY LINE and addressed each and every one of the allegations. An answer doesn't usually go line by line and do it so aggressively, unless it was partly for publicity, too. Which, to be fair, I think that Kik has played pretty aggressively on the publicity front from the get go— with the statements released before the complaint about how they won't settle, releasing their wells report, the whole 'defend crypto” campaign, and now this.

I think that some of the statements that were made by Kik (and used by the SEC) were probably taken somewhat out of context, but so much of the answer became a he said// she said situation that after a while it really made my head hurt.

I will say, however, that I do have some sympathy for all the crypto companies that either did, planned to, or thought about doing a token sale in 2016/2017/2018. In all fairness, the law has been slow to catch up here, and what happened in those sales was somewhat of a classic ‘move fast break things’ mentality with not enough regard for the ultimate consequence. I also don’t think that Kik was alone in either saying or writing those (now) damning statements. Livingston’s speeches/ interview excerpts were said by a lot of crypto founders — although maybe the Kik ICO didn’t need to raise the $100 million, and certainly could have had a (much) better utility use case prior to their ICO. But a lot of well-intentioned people, as well as scammers, are had said the same lines and I think in some cases, genuinely believed in it.

The facts of this case is mostly known, but I think more will come out in trial as we start to introduce testimonies from people and admitting evidence that may either explain good-faith motives or be entirely damning. Also, I am amazed that the response came out in the form of an answer + all affirmative defenses. I really thought that it could’ve been a motion to dismiss— because choosing to go the answer route is the most time consuming, discovery-heavy, and all around burdensome route to go. But, as we know, this truly is one giant litigation showdown.

- Katherine

thanks for reading, and always remember that none of this is legal advice. if this is helpful to you, feel free to share!

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UPDATE: the final and filed version is here

Dissecting the Settlement with the SEC

Dissecting the Settlement with the SEC

Annotated Guide to the SEC's Complaint against KIK

Annotated Guide to the SEC's Complaint against KIK