Strong Similarities Between SEC Case Against Kik's ICO and Mark Owen Vs Elastos

on
The Kik's Case
The Securities and Exchange Commission sued Kik Interactive Inc. for conducting an illegal $100 million securities offering of digital tokens.  The SEC charges that Kik sold the tokens to U.S. investors without registering their offer and sale as required by the U.S. securities laws.
Kik had lost money for years on its sole product, an online messaging application, and the company’s management predicted internally that it would run out of money in 2017.  In early 2017, the company sought to pivot to a new type of business, which it financed through the sale of one trillion digital tokens.  Kik sold its “Kin” tokens to the public, and at a discounted price to wealthy purchasers, raising more than $55 million from U.S. investors.  The complaint alleges that Kin tokens traded recently at about half of the value that public investors paid in the offering.
Kik marketed the Kin tokens as an investment opportunity.  Kik allegedly told investors that rising demand would drive up the value of Kin, and that Kik would undertake crucial work to spur that demand, including by incorporating the tokens into its messaging app, creating a new Kin transaction service, and building a system to reward other companies that adopt Kin. 
“By selling $100 million in securities without registering the offers or sales, we allege that Kik deprived investors of information to which they were legally entitled, and prevented investors from making informed investment decisions,” said Steven Peikin, Co-Director of the SEC’s Division of Enforcement.  
“Kik told investors they could expect profits from its effort to create a digital ecosystem,” said Robert A. Cohen, Chief of the Enforcement Division’s Cyber Unit.  “Future profits based on the efforts of others is a hallmark of a securities offering that must comply with the federal securities laws.”

The Elastos Case
The subject matter of Mark Owen Vs Elastos is the defendants solicitation and sale of unregistered securities-the Elastos cryptocurrency to investors in the United States .Elastos founders Rong Chen And Feng Han had made multiple public statements in various seminars that token buyers would profit from the efforts of Elastos foundation in developing a digital ecosystem powered by ELA 
The ELA Securities are a passive investment by the public in the Elastos enterprise;with the expectation that the ELA Securities themselves will appreciate in value in the public market as the result of the Elastos Foundations' efforts in developing the functionality of the product, as well as the demand for ELA Securities in the market driven by the defendants' marketing efforts.
Similar to Kik, Elastos sold ELA tokens to private investors at a discounted price 
Similar to kik's management Elastos management also predicted that it would run out of money in 2020 .
Elastos Ex CMO Fay Li told investors that they could expect profits from its effort to create a digital ecosystem with ELA as base currency.
What Fate Awaits Elastos on Judgement Day ?
                                                            Presiding Judge Marcy Friedman
Going by the facts and circumstances of the case it is likely to prove at trial that Elastos conducted an unregistered, illegal public offering . Elastos will be ordered to pay a sum in penalty equivalent of the amount raised in public offering together with interest. Further Elastos will be barred from operating in US.

 Of course paying the penalty in millions would be debilitating to the already cash strapped Elastos Foundation . ELA price could go down below $1 in the panic sales that ensues and the project would come to a grinding halt in the following months.


Comments

Post a Comment