Canadian tokenized social media startup Kik has launched a $5 million crypto initiative to fund a lawsuit against the United States Securities and Exchange Commission (SEC), Kik CEO announced in the crypto-focused Unchained podcast by Laura Shin on May 28.
Ted Livingston, Kik CEO and founder of Kik’s crypto project the Kin Foundation (KIN), revealed the formation of DefendCrypto fund to legally challenge the U.S. SEC in order to get regulatory clarity from the major U.S. financial watchdog.
While the fund’s domain DefendCrypto.org was registered 25 days ago as of press time, the initiative was announced on May 28 along with Patrick Gibbs, partner at California-based law firm Cooley. The fund will use the custody service of major American crypto exchange and wallet service Coinbase, as revealed in the podcast.
The action against the SEC follows Kik’s $100 million initial coin offering (ICO)
sale for its Kin token, which was completed in late 2017. The ICO subsequently attracted the SEC’s attention, with the financial regulator sending a notice to the firm claiming that Kik’s Token Distribution Event (TDE) violated securities laws.
In November 2018, the SEC eventually proposed a recommendation of an enforcement action for Kik and the Kin ecosystem, obliging the entity to respond within 30 days.
Following the move, in January 2019, Kik warned the U.S. regulators that they will fight back against a proposed enforcement action against the firm. In mid-May, Kik CEO Livingston revealed that Kik had spent more than $5 million in the ongoing negotiations with the U.S. SEC on the matter.
By initiating the DefendCrypto fund, Livingston intends to finally solve the regulatory problem around the company, as well as to bring an end to the overall existing regulatory uncertainty around the crypto industry. Livingston noted that the SEC’s uncertainty about the industry hampers the ability for innovators to compete on the global stage. He concluded:
“Enough is enough, we need clarity, and the only way we’re going to get clarity is if we go to court, so let’s do that.”
In May of this year, the SEC commissioner Hester Peirce, also known as the “crypto mom,” said that she was concerned that the cryptocurrency industry was being hindered by the relative slowness of the SEC’s regulatory decision-making.