Recently, Ted Livingston, the CEO of a Canadian-based messaging startup, Kik, spoke about the reason they were being sued by the United States Securities and Exchanges Commission, in an interview for CNBC Crypto Trader. Livingston also spoke about the famous Howey Test and explained why it would not hold in this case.
Livingston was asked about the exact reason the commission was after Kik: whether it was for raising money via an ICO or for having “an instrument in circulation” that does not comply with the commission’s requirements. To this, the CEO stated that in the Wells notice, which they had received in November, the commission’s emphasis was on both the Kin tokens that were sold during the ICO, its current usage and tokens issued by Kin Foundation.
He went on to state,
“they don’t talk about anything to do with Kin being used to or anything to do with Kin foundation. It’s purely about the token sale in 2017. So, to me that’s exciting, they’ve backed down the idea that Kin, today, being used in dozens of apps by millions of people is a security, they made no comment on that today […]”
This was followed by Livingston speaking about another key factor pointed out by the commission, the firm telling investors that they could expect profits and its appliance to the Howey Test. He stated that this was not “what the Howey Test is”, adding that because an asset could become more valuable does not imply that it was a security.
[…] Just because a group of people have a common incentive, does not make it a security. The Howey test makes it very clear from the 1940s. So to us, the announcement is quite clear and that’s why we got excited when the DAO report came out,