Between 2010 and 2017, Kik Interactive Incorporated was primarily known as the Canadian creator of the instant messaging app called Kik Messenger. Approximately 40% of the people who use the app are teenagers, while the remaining 60% are mostly younger children.
In 2017, Kik Interactive generated approximately $100 million from the initial coin offering of its new cryptocurrency “Kin.” This seemed unusual for a company which established itself in the communication industry rather than the financial industry. The suspicion over this initial public offering caught the attention of the United States Securities and Exchange Commission, also known as the SEC.
The SEC filed a lawsuit against Kik Interactive over the $100 million worth of Kin tokens they sold. According to the complaint, Kik Interactive failed to register their Kin cryptocurrency as a security with the SEC. All the tokens that Kik sold to investors will be considered securities if SEC gets their way in court. If the SEC wins the lawsuit, Kik will be forced to refund the entire $100 million to the investors who paid for tokens.
Some further allegations were made toward Kik which described why they wanted to have an initial public offering of cryptocurrency in the first place. Just before Kin was created, there were a lot of controversies related to their Kik Messenger app. Disturbing reports surfaced about how an increasing number of child predators were using the app to target children.
Why did Kik Interactive launch a crypto coin
As the reports became public, the number of app users declined considerably. Parents stopped letting their children use the app in order to protect them from the possibility of encountering a child predator. Kik saw their revenue decrease drastically throughout 2017, which sent executives into a panic. The SEC believes that Kik needed to make back the money it lost as fast as possible, so they supposedly turned to cryptocurrency to generate big money quickly.
Of course, Kik tells a different story about why they launched their new decentralized currency. The company claims that Kin was supposed to be a new digital payment feature that they wanted to make available to the millions of people who use their messenger app. Since Kin is a decentralized currency, Kik users can make faster and safer purchases through the app. This is what Kik claims that their goal was the entire time.
If Kik were to classify Kin as a security, then it would no longer be decentralized. This would defeat the purpose of offering Kin in the first place because Kik wants it to be decentralized. That is why Kik is fighting the SEC’s lawsuit against them. Kik believes Kin is decentralized enough to where it doesn’t need to be a security. However, the SEC doesn’t seem to believe this argument. They say if the prospects of only a single company determine the value of the Kin tokens, then they’re securities.
After the announcement of the lawsuit was made by the SEC, [Kin’s value dropped by more than 30%])https://coinmarketcap.com/currencies/kin/#charts) in 1 day. Investors are nervous over the SEC getting involved and stirring up this kind of trouble for the cryptocurrency. But Kik continues to be on the defensive against this lawsuit because the company believes it did nothing wrong. Kik’s biggest defense is how they never actually sold any Kin tokens. The only two sales they conducted were a public token sale for ether tokens and a private Simple Agreement for Future Tokens.
Kik argues they are exempt from having to register with the SEC because they used an SEC Regulation D filing when they established the Simple Agreement for Future Tokens with accredited investors only. The company raised $50 million from this agreement before the initial coin offering took place. As for the public token sale, Kik supposedly received $50 million worth of Ethereum tokens in exchange for their Kin tokens. Only 10,000 people were involved in these purchases, 66% of which lived outside of the United States.
Kik alleges that the SEC is falsely combining these two sales and thinking of them as one sale. Furthermore, Kik adamantly denies trying to desperately generate revenue for their company by launching this initial public offering. They don’t even seem to care about their Kik Messenger app anymore. Ted Livingston, the CEO of Kik Interactive, expressed his desire to save Kin even if it means draining all the money out of his own company. This would explain why he’s decided to shut down Kik Messenger, despite it having 300 million users.
Although, some may argue the real reason is related to the scandals and controversies surrounding the app, which have people uninstalling it. Perhaps Kik is trying to bail out of that mess by investing themselves in a completely new venture. We shall see what the courts decide in this matter.
Overview of Kin
Kin is a type of cryptocurrency which is exclusive to the Kik community. User contributions to the community will earn them Kin tokens, which are exchangeable for Kik goods and services. The types of contributions you can make include reporting bugs, brand engagement, and promoting causes.
On the other hand, you can also use real money to buy and sell Kin tokens. Kin is part of the public blockchain just like Bitcoin. A lot of investors are planning to purchase Kin tokens while their market value is still low. The hope is that the value will increase substantially in the future, like what happened with Bitcoin.
As of right now, you can purchase a Kin token for $0.000008 USD each. Imagine how many you can purchase with just a few hundred dollars. If the value were to move a few decimal places to the right, then so would your investment. There is no telling if the value will increase, especially with the SEC lawsuit pending. But if Kik is successful in defending themselves in the lawsuit, you can bet that the value will shoot back up very quickly.
You can still download the Kik Messenger app to access the Kin wallet. Otherwise have a look at other integrations