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> Kik is different in that they have deep pockets, strong legal counsel, and a product that's been out there for 8 years. Except they don't. The only money th

by JackFr 7y ago

> Kik is different in that they have deep pockets, strong legal counsel, and a product that's been out there for 8 years. Except they don't. The only money they have is from an unregistered sale of securities which was only undertaken because they HAD NO MONEY. Their product costs more to run than it makes, and is irrelevant to the SEC lawsuit.

at-fates-hands 7y ago
> The only money they have is from an unregistered sale of securities which was only undertaken because they HAD NO MONEY. Don't you think this would come out at trial? Sounds like the only reason they came out with an unregistered ICO was in order to generate revenue it needed to continue operating. That's a huge red flag for me if I'm an SEC investigator
- solotronics 7y ago
  I am not sure if this is a legitimate argument because you can apply the same logic to Uber and Tesla.
  - greglindahl 7y ago
    Uber and Tesla sold traditional securities to accredited investors, the same way that everyone else normally does.
  - MagnumOpus 7y ago
    Except that they confirmed to laws and SEC regs and Kik didn't? That makes all the difference...
    - nostrademons 7y ago
      Uber "conformed to laws" is rich considering HN commentary on that company over the last 8 years... (To be fair, the SEC is pretty much the one government agency that Uber did not piss off - it's just the IRS, FBI, DoJ, and almost every local government in America that they're in trouble with.)
      - jeromegv 7y ago
        It's not rich when we talk about the SEC here. Uber conformed to laws of the SEC. The other agencies are irrelevant to that discussion.
      - TeMPOraL 7y ago
        Uber deserves to be burned to the ground just for the legal shenanigans it played, but if in this case they were above the board, then it's fair to say so.
  - deleted 7y ago
    [deleted]
- flyGuyOnTheSly 7y ago
  It already came out upon initial investigation and most likely subpoenas: >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.
  - nefitty 7y ago
    Wow, when you see it laid out like that, crypto looks terrifying. Note, I mean as an investment independent of technological prospects.
    - nostrademons 7y ago
      Curious why? Investment in new & emerging technologies or markets is always high-risk: I've had years when my Emerging Markets index fund lost half its value, and I know friends that basically lost everything in the dot-com bubble. Hell, the S&P 500 lost 40% of its value in 2008. I would hope that nobody is putting money into crypto that they need to live on. But for money that you aren't going to need for years, there's a good chance that some form of cryptocurrency will end up replacing much of the current financial system, and it makes sense to diversify bets across them.
      - flyGuyOnTheSly 7y ago
        >I've had years when my Emerging Markets index fund lost half its value, and I know friends that basically lost everything in the dot-com bubble. Losing half of your investment's value and the dotcom bubble are nothing compared to crypto losses for some unfortunate investors, unfortunately. Plenty, if not most of the cryptocurrencies out there... are down >95% from their peaks in late 2017/early 2018.
      - otw 7y ago
        Can you sketch what you mean by there being a good chance some type of cryptocurrency will replace the financial system of today? Is the idea something along the lines of the double forces of greed and fear causing the perfect bubble? The one that doesn't pop because it eats its own downside on the way? Why won't governments just shut down the on-ramp exchanges if the space ever looks like more than a way to gamble or make hidden-ish transactions?
anbop 7y ago
But they have that money today. They can spend it on lawyers. If they win, they still have it, if they lose, well now they go bankrupt just $55m more in the hole than before. It’s not like anything will happen to the executives.
- JackFr 7y ago
  > But they have that money today. They can spend it on lawyers. Lawyers know that they cannot be paid with that money. If they lose it will be forfeited. Similarly you can't rob a bank and use the money to pay your lawyer. > It’s not like anything will happen to the executives. That's absolutely not true. It's not unreasonable to expect that the SEC might refer people to the DOJ for criminal prosecution and jail time would send a nice signal.
pfisch 7y ago
Weren't they selling tokens that could be used to send messages on the service they were creating? That doesn't really sound like a security to me...

by JackFr 7y ago

at-fates-hands 7y ago

> The only money they have is from an unregistered sale of securities which was only undertaken because they HAD NO MONEY. Don't you think this would come out at trial? Sounds like the only reason they came out with an unregistered ICO was in order to generate revenue it needed to continue operating. That's a huge red flag for me if I'm an SEC investigator

solotronics 7y ago
I am not sure if this is a legitimate argument because you can apply the same logic to Uber and Tesla.
- greglindahl 7y ago
  Uber and Tesla sold traditional securities to accredited investors, the same way that everyone else normally does.
- MagnumOpus 7y ago
  Except that they confirmed to laws and SEC regs and Kik didn't? That makes all the difference...
  - nostrademons 7y ago
    Uber "conformed to laws" is rich considering HN commentary on that company over the last 8 years... (To be fair, the SEC is pretty much the one government agency that Uber did not piss off - it's just the IRS, FBI, DoJ, and almost every local government in America that they're in trouble with.)
    - jeromegv 7y ago
      It's not rich when we talk about the SEC here. Uber conformed to laws of the SEC. The other agencies are irrelevant to that discussion.
    - TeMPOraL 7y ago
      Uber deserves to be burned to the ground just for the legal shenanigans it played, but if in this case they were above the board, then it's fair to say so.
- deleted 7y ago
  [deleted]
flyGuyOnTheSly 7y ago
It already came out upon initial investigation and most likely subpoenas: >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.
- nefitty 7y ago
  Wow, when you see it laid out like that, crypto looks terrifying. Note, I mean as an investment independent of technological prospects.
  - nostrademons 7y ago
    Curious why? Investment in new & emerging technologies or markets is always high-risk: I've had years when my Emerging Markets index fund lost half its value, and I know friends that basically lost everything in the dot-com bubble. Hell, the S&P 500 lost 40% of its value in 2008. I would hope that nobody is putting money into crypto that they need to live on. But for money that you aren't going to need for years, there's a good chance that some form of cryptocurrency will end up replacing much of the current financial system, and it makes sense to diversify bets across them.
    - flyGuyOnTheSly 7y ago
      >I've had years when my Emerging Markets index fund lost half its value, and I know friends that basically lost everything in the dot-com bubble. Losing half of your investment's value and the dotcom bubble are nothing compared to crypto losses for some unfortunate investors, unfortunately. Plenty, if not most of the cryptocurrencies out there... are down >95% from their peaks in late 2017/early 2018.
    - otw 7y ago
      Can you sketch what you mean by there being a good chance some type of cryptocurrency will replace the financial system of today? Is the idea something along the lines of the double forces of greed and fear causing the perfect bubble? The one that doesn't pop because it eats its own downside on the way? Why won't governments just shut down the on-ramp exchanges if the space ever looks like more than a way to gamble or make hidden-ish transactions?

anbop 7y ago

But they have that money today. They can spend it on lawyers. If they win, they still have it, if they lose, well now they go bankrupt just $55m more in the hole than before. It’s not like anything will happen to the executives.

JackFr 7y ago
> But they have that money today. They can spend it on lawyers. Lawyers know that they cannot be paid with that money. If they lose it will be forfeited. Similarly you can't rob a bank and use the money to pay your lawyer. > It’s not like anything will happen to the executives. That's absolutely not true. It's not unreasonable to expect that the SEC might refer people to the DOJ for criminal prosecution and jail time would send a nice signal.

pfisch 7y ago

Weren't they selling tokens that could be used to send messages on the service they were creating? That doesn't really sound like a security to me...