U.S. District Court Judge Alvin Hellerstein said there is "no binding precedent" for SEC vs. Kik case. Credit: Shuttershock
Kik’s proverbial day in court may last a lot longer than Telegram’s.
That’s the takeaway from a federal judge’s response to the U.S. Securities and Exchange Commission during a hearing in its case against messaging platform Kik over the company’s 2017 initial coin offering, which raised $100 million.
Judge Alvin K. Hellerstein, senior judge of the United States District Court for the Southern District of New York, rejected the SEC’s argument that the token sale was similar to that of Telegram, another messaging company which raised money for a blockchain project, and should face a similar outcome. The SEC won a preliminary injunction against Telegram this year, ordering the company to the issuance of its gram tokens, and the firm later discontinued .
“I think that there is no binding precedent one way or another,” Hellerstein said.
Nearly 200 people dialed in to listen to Thursday’s hearing, which took place just over a year after the SEC filed suit. Both the SEC and Kik have , meaning they hope before it reaches a jury trial, either by a ruling that Kik violated securities laws (the SEC’s argument) or that it didn’t (Kik’s argument). It is now up to the judge to either grant a judgment or let the trial proceed, unless the parties settle.
When SEC counsel Stephan Schlegelmilch invoked the Telegram case as a very similar token offering to Kik’s, Judge Hellerstein interrupted. He noted that Judge P. Kevin Castel, who presided over the Telegram case, only found that there was a “likelihood of success” in the preliminary injunction ruling.
“Now with you, it’s different,” he told Schlegelmilch. “You’re asking for summary judgment. I understand that Judge Castel’s decision has a lot of reasoning that is comfortable to you. [It’s a] very well-reasoned decision characteristic of Judge Castel, but I think our issue is different.”