SEC Blasts Kik’s ‘Void for Vagueness’ Defense of 2017 ICO
The U.S. Securities and Exchange Commission (SEC) said Kik’s August defense of its $100 million initial coin offering (ICO) was “untenable” and is asking judges to toss it.
A discovery motion filed Monday further raised the stakes, following the SEC’s 49-page filing Friday – the latest play in a legal chess match with sweeping potential ramifications for tokens and securities law, and one seeking, more specifically, to determine whether Kik’s 2017
ICO was lawful.
In Friday’s filing, the SEC ridiculed Kik’s defense that vagueness shields them from legal woes:
“This defense asserts that, notwithstanding 70-plus years of well-settled jurisprudence, the term ‘investment contract’ in the securities laws is void for vagueness as applied to Kik’s investment scheme. This claim is untenable and should be dismissed.”
Kik has bet the farm on a “void for vagueness” affirmative defense, and wants to depose high-ranking SEC officials to prove the regulator was not in a position in 2017 to give clear guidance on
Rebecca Rettig, a partner at FisherBroyles, told CoinDesk:
“Kik is obviously using the void for vagueness defense as a way to try to peek behind the curtain at the SEC to figure out if the SEC really had a plan all along.”
But the SEC argued in the same discovery motion that Kik’s affirmative defense is without legal merit. The regulator tied their argument to Friday’s flaying of the “void for vagueness” question, arguing Kik’s deposition’s motions “should be quashed.”
If the judges agree, Rettig says the SEC will “kill two birds with one stone.”