Does KIN - the coin developed by Kik Interactive - does it FAIL the Howey Test?
Where do I begin with mighty little KIN?
I got interested in this coin a few years back, when the SEC first sued Kik Interactive for selling unregistered Securities. Looks like it was June 2019:
https://www.sec.gov/news/press-release/2019-87
Rather than settle, Kik decided to fight the case in court, and they were willing to make any sacrifice necessary to do it:
This was dramatic stuff - the runt standing up to the bully, the everyday guy finally confronting The Man, literally David versus Goliath. And I loved it! Like the CEO in that tweet, I was all in on KIN. Because I subscribe to what I refer to as "event-driven investing". I like when a decision in the future, like a court ruling, or an election, or the regulation I've previously discussed - some sort of "event" - influences the price of an investment one way or another. Because you can base your decisions on it. Sometimes you're right; sometimes you're wrong, but at least you can defend your position. Anyway, I was all in on KIN, and to prove it, one gray Spring day back in 2020, I decided to open an account on BitcoinTalk and share some facts about KIN. It's my one and only post, and I got the idea to pose as a Millennial writing it, in an effort to appeal to the younger generation:
https://bitcointalk.org/index.php?topic=5233352.0
I doubt it worked, but I didn't care. I kept buying and buying this crazy cheap coin, on crazy foreign exchanges I sometimes had to translate, using a VPN when necessary, until I was literally included in something like the top six hundred token holders in the world:
https://kinview.surge.sh/accounts
I researched the Judge presiding over the case - the Honorable Alvin K. Hellerstein; I read about Kik Interactive's defense team at the Cooley Law Firm, and how their lawyers wrote the SAFT whitepaper:
https://www.cooley.com/news/insight/2017/2017-10-24-saft-project-whitepaper
I immersed myself in the case - studying case law, reviewing precedents, arguing with anyone interested. I truly believed they could win. But then, of course, this happened:
"Damn, I thought we had this one," said one of my co-workers, echoing my disappointment. But he wasn't nearly as invested as I was - both emotionally and financially. What made it even worse was after the Summary Judgement, the Honorable Alvin K. Hellerstein didn't announce the penalties; he made us wait, and it was torture. The KIN Community was in shambles. No one knew what to expect. It was like we were all waiting to go to the electric chair, but we didn't know when.
But then, someway, somehow - and I don't have time to research it now - we discovered the Judge would issue his ruling on 10/20/2020. I remember the symmetry of that date. This was a post, and subsequent comment thread, on the KinFoundation SubReddit that morning. Take a moment and read it - Nelson Mandela, Dylan Thomas? I doubt you'll find something like that in the Shibu Inu Sub:
https://www.reddit.com/r/KinFoundation/comments/jek31a/good_luck_everyone/
That thoughtful, engaged, supportive Community remains the single most important reason I've supported KIN all these years. And I doubt the Community ever felt a more collective sense of joy, of relief, of simple hope, than the day the Judge imposed the penalties:
https://www.sec.gov/news/press-release/2020-262
I didn't even have to see them; I just looked at the price. That morning, KIN shot up and kept rising all year. Because the penalties were basically nothing - a $5 million fine, which insurance covered, and a three-year promise to tell the SEC what they're doing with their remaining KIN. But that's it - nothing more. Just carry on; have fun. We won't bother you anymore.
No one could believe it!
And that's when I realized - you get what you pay for. Those Cooley lawyers were slick. I listened to the oral arguments they presented to the Judge; they had a good solid case. They knew it; I think the SEC knew it too. So I think - and please understand, this is only my opinion, I have no proof - I think they negotiated a deal behind the scenes, so the SEC could win, but KIN wouldn't lose. It was the only choice. Because the SEC couldn't lose; if they did, they'd lose their power to regulate any other coin. They just couldn't abdicate their authority.
So now KIN is clear, and they recently acquired an independent legal opinion to prove it:
https://kin.org/horizons-law-completes-legal-analysis-of-the-kin-token/
So, is KIN a Howey Test Failure? It doesn't matter, because the SEC no longer considers it a Security.
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