The Kitchener, Ont.-based company behind the chat app Kik is paying US$5 million to resolve allegations from the U.S. Securities and Exchange Commission (SEC) that it violated U.S. securities laws with an unregistered crypto offering.
The SEC announced that a federal district court entered a judgment on consent against Kik Interactive Inc. that resolved the regulator’s charges following a digital token offering in 2017.
The court approved the SEC’s finding that the tokens were investment contracts and that the unregistered offering violated U.S. securities laws.
“This has been a long, expensive, and public battle between Kik and the SEC,” Kik said in a statement.
“Although we respectfully disagree with Judge Hellerstein’s analysis in his ruling and were prepared to pursue an appeal, the SEC offered settlement terms that allow us to put this behind us and focus on our mission.”
The final judgment requires Kik to pay a US$5 million penalty and to notify the SEC before engaging in digital asset sales over the next three years.
“Issuers seeking to use the public markets to capitalize their businesses may not evade the registration requirements of the federal securities laws,” said Kristina Littman, chief of the SEC enforcement division’s cyber unit.