Canada-based messaging app firm Kik has launched a crypto crowdfunding campaign to support a likely court battle with the U.S. Securities and Exchange Commission (SEC) over its 2017 initial coin offering (ICO).
Announced by Kik founder and CEO Ted Livingston and Patrick Gibbs, a partner at law firm Cooley LLP, on the UnChained Podcast Tuesday, the campaign is being launched in the hopes that “a lawsuit would eventually result in a new Howey test for crypto tokens, to determine which ones are a security.”
A dedicated website – dubbed Defend Crypto – has already been set up allowing supporters to contribute to the fundraising effort, that its founders say is not only in support of Kik but many crypto firms that face potential action from the U.S. regulator. The site offers donation options in 19 cryptocurrencies, including bitcoin (BTC), ether (ETH) and XRP, as well as less standard options like augur (REP), DAI and, of course, Kik’s kin (KIN) token.
While Kik maintains that its token is used as a currency, the SEC has expressed concerns that kin might be a security and the regulator may seek an enforcement action against the firm.
Indeed, SEC chairman Jay Clayton has previously said: “I believe every ICO I’ve seen is a security.” He added: “I want to go back to separating ICOs and cryptocurrencies. ICOs that are securities offerings, we should regulate them like we regulate securities offerings. End of story.”
On the new website, Kik states:
“After months of trying to find a reasonable solution, Kin has been unable to reach a settlement that wouldn’t severely impact the Kin project and everyone in the space. So Kin is going to take on the SEC in court to make sure there is a foundation for innovation going forward.”
Arguing that the case would set a precedent for how cryptocurrencies are regulated in the U.S., Kik said the Defend Crypto campaign would help ensure the funds are in place “to do this the right way.” The firm claims it’s already spent over $5 million on the case and is now committing another $5 million in BTC, ETH, and KIN “to fight this out on behalf of the industry.”
Noted crypto investor Fred Wilson indicated in a blog post that he’s already donated to the cause, and said: “It is my hope, and Kin’s hope, that DefendCrypto.org will be an inspiration for the many other important crypto projects that are silently battling with the SEC to come public and raise capital from the crypto sector for their fights.”
Kik is encouraging other supporters to fight this “innovation tax” by donating cryptos that will held in a Coinbase account and only be used once Kik’s $5 million has been spent. Unused funds will be allocated to “other initiatives.”
Livingston told CoinDesk earlier this month:
“In the last month alone, over a million people earned kin from 40 different apps, from 40 different companies. Over a quarter million people used kin, making it the most-used cryptocurrency in the world, and they’re not even willing to say that’s not a security.”
Kik image via Shutterstock