Stephen Palley, a well-known lawyer in the crypto-space spoke to CNBC’s CryptoTrader Ran NeuNer and opined his views on the lawsuit against Kik by the SEC.
Kik’s issue with the SEC was made public when the company announced that they were planning to fight against the lawsuit brought forth by the SEC. The company has since raised approximately $5 million funds in crypto, to fight SEC.
Stephen Palley explained that the SEC had filed the case against Kik in a Federal Court for an ‘unregistered $100 million token offering in 2017’ and not securities fraud. Palley added:
“This is the first instance of the SEC actually going to a Federal Court and suing a token issuer for violating the registration provisions of the Securities Act of 1933.”
He added that all the other cases which have failed to register securities have been filed and settled in administrative courts. and that this was “pretty big news”. Palley further added that the SEC’s strategy on focussing with “failing to register security” was a “wise” move but also mentioned that “it is not an un-winnable case”.
Palley mentioned that Kik had already spent $5 million as seen on the “defend crypto” website even before going to court and that it would take them a lot more than that if the case were to proceed. He said:
“I don’t think that $5 million is enough… Defense lawyers for this sort of case can cause $1000 an hour sometimes more, depends on depositions, whether it goes to trial, how the appeal cost… it can easily cost $10 to $20 million. I don’t think $5 million will be enough if they intend to take this all the way through.”
Ted Livingston, the CEO of a Canadian-based messaging startup Kik opined that the SEC’s allegations were a “gross mischaracterization and misleading facts”. He also mentioned that they would take this all the way to the end.
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