The United States Securities and Exchange Commission (SEC) has been in an intense court battle with Kik messaging company over the USD 100 million Kin initial coin offering (ICO) that occurred in 2017. Apparently Kik spent so much money on the court battle that they had to close down their messaging app, which was the meat and potatoes of their business. Despite spending so much on this court case, Kik is now on their last stand, betting everything on the void for vagueness defense.
Essentially, Kik claims that its ICO does not count as a security, and therefore is not under SEC jurisdiction. However, the Howey Test, which is the rule that determines if something is an investment contract, states that if an investment is made in expectation of profit then it is an investment contract and therefore a security.
Now Kik is saying that the Howey Test should be voided because it is too vague, and allows the SEC to regulate the crypto space in an arbitrary and discriminatory manner.
That being said, it seems unlikely that Kik will be able to nullify the Howey Test since it has been the law since 1946. The SEC calls Kik’s void for vagueness claim “untenable”.
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