Kik, the embattled messaging startup behind the Kin cryptocurrency, is now crowd-sourcing donations to help fund its legal battle with US regulators.
The Defend Crypto Fund is said to be tailored specifically to fight the US Securities and Exchange Commission (SEC) “on behalf of the future of crypto in the [United States].”
So far, Kik itself has contributed $5 million to the fund, which is apparently held in special Coinbase accounts. Earlier this month, Coindesk quoted its CEO saying the firm had spent at least $5 million throughout the ordeal already.
“Any additional contributions will be held with Coinbase and will only be used if that $5MM [sic] isn’t enough. In that case, expenses will be disclosed, and — after a court decision is made — the Defend Crypto fund will allocate the remaining resources to other initiatives,” reads an FAQ.
SEC regulators have already commenced legal action against Kik, which raised $98 million in late 2017 with an initial coin offering to develop the Kin blockchain protocol and cryptocurrency ecosystem.
Kin tokens, they say, should have been registered as securities with US regulators. As such, the SEC maintains that Kik‘s ICO violated securities law in America.
Kik‘s entrepreneurial chief executive Ted Livingston thinks otherwise.
In fact, Livingston went so far as to claim that Kin is “the most-used cryptocurrency in the world,” and that over 250,000 people had used it, which (according to Livingston) makes it a currency — not a security.
“For the future of crypto, we all need Kin to win,” reads the Fund’s website. “This case will set a precedent and could serve as the new Howey Test for how cryptocurrencies are regulated in the United States.”
Securities are typically identified through the Howey Test, a framework that (in part) determines whether investors stand to make profit on an investment as a result of the efforts of others.
If investors stand to make money without doing anything at all, it’s likely the asset should be a registered security.
In January this year, footage surfaced that showed Livingston doing his best to hype his Kin token — then in pre-sale ICO phase — by claiming it would one day “become super valuable.”
For more information regarding how the SEC decides which cryptocurrencies are securities, you can read chairman Jay Clayton’s statements on the matter here.