The Kin Foundation recently started a movement called Defend Crypto. The article I wrote a few months ago goes into detail about the legal jargon surrounding the issue. To sum things up, in November 2018 the SEC filed a Wells Notice stating that they were considering bringing an enforcement action against Kik and their cryptocurrency called Kin. The SEC believes that Kin should be considered a security, and regulated as such. Kik brought together a team of lawyers and sent the SEC a formal response explaining why Kin is a currency and not a security. The problem here is that the SEC already said that BItcoin and Ethereum are not securities, so arguing that Kin is an exception to their previous ruling will be a hard sell.
The Kin Foundation has already invested $5 million to fund their legal battle with the SEC. Anthony Pompliano, a popular voice in the crypto community, recently sat down with Ted Livingston, the founder of Kik, to get his thoughts on recent events. Ted said that he actually wants this to go to court. “A lawsuit would eventually result in a new Howey test for crypto tokens, to determine which ones are a security.” The Howey test is a set of criteria that the SEC uses to determine what is and what is not a security. This came from a big court case about 75 years ago and it helped set a precedent for what a security is. Unfortunately for Kik and the SEC, cryptocurrency does not easily fit into the “securities” box. We will need new laws if we want to properly leverage this technology. At this point it seems the SEC is kicking the can down the road. They will eventually need to take a case like this to court in order to establish much needed rules and regulations so the blockchain and cryptocurrency industry can have clear guidelines on what is and is not allowed.