SEC Opposes Blockchain Association's Brief Supporting Kik, Says Group Isn't 'Neutral'

The SEC says 7 members of the Blockchain Association have financial interests in Kik in its opposition to the group's brief around the case.

Apr 28, 2020 at 3:05 p.m. UTC
Updated Sep 14, 2021 at 8:34 a.m. UTC

Update (April 28, 20:50 UTC): In a statement to CoinDesk after the publication of this article, the Blockchain Association said it was "proud to file its amicus brief in this matter." Further, a U.S. District Judge allowed the Blockchain Association to file a brief a day after the SEC filed an objection. Read more here.

The U.S. Securities and Exchange Commission (SEC) moved to oppose the Blockchain Association from providing evidence to the court.

Filed last week with the District Court for the Southern District of New York, the U.S. financial watchdog requested the court deny the Blockchain Association's motion for leave to file an amicus, or friend of the court, brief – a non-partisan filing intended to assist the court by providing information, expertise and insight – arguing many association members have a vested interest in Kik's success.

The SEC said seven companies in the 24-member association have a direct financial interest in the outcome of the case: four members, including Polychain Capital and eToro, have a direct investment in Kin tokens; USV holds equity in the company; CoinList performed due diligence for the Kin offering; and Cumberland handled the liquidation of some of the offering's proceeds.

Arguing the Blockchain Association – which includes Coinbase, Kraken and 0x among its members – "is hardly "objective, dispassionate [or] neutral," the regulator even alleged the brief could well be financed by the multi-million dollar "DefendCrypto" litigation fund, which is overseen by the Blockchain Association and received a $2 million donation from Kik, its original founder, last year.

"While we suspect Kik would appreciate having its arguments parroted by a supposedly neutral third party, we submit that the parties are well represented here" and "their counsel do not need supplemental assistance," the filing concludes.

In their role of providing information for the benefit of the court, friend of the court briefs are usually required to stick close to the facts. Many advocacy groups specialize in providing these types of filings and attorneys are able to focus on the facts and evidence that appear to be most favorable to their clients.

Opposition motions to friend of the court briefs are uncommon and usually stem from one party's concerns they could well be biased in one way or another.

The presiding judge can hear arguments from the other party, in this case Kik, before determining whether to admit contested amicus briefs into court.

Read the full filing below:

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