The U.S. Securities and Exchange Commission (SEC) is suing Kik for allegedly running an unregistered securities sale when it launched an initial coin offering (ICO) for its kin token in 2017.

In a filing submitted Tuesday in the Southern District of New York, the SEC said Kik violated Section 5 of the Securities Act of 1933, which requires offerings to be registered.

“By selling $100 million in securities without registering the offers or sales, we allege that Kik deprived investors of information to which they were legally entitled, and prevented investors from making informed investment decisions,” said Steven Peikin, co-director of the SEC’s Division of Enforcement. “Companies do not face a binary choice between innovation and compliance with the federal securities laws.”

As alleged in the SEC’s complaint, Kik had lost money for years on its sole product, an online messaging application, and the company’s management predicted internally that it would run out of money in 2017. Kik’s losses averaged about $30 million a year, according to the SEC, and earlier attempts by Kik to be acquired by a larger technology company had failed, with seven potential suitors all declining to buy or merge with the company.

In early 2017, Kik sought to pivot to a new type of business, which it financed through the sale of one trillion digital tokens. The company 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 SEC complaint alleges that kin tokens traded recently at about half of the value that public investors paid in the offering.

According to the complaint, the Ontario Securities Commission previously told the Waterloo, Canada-based Kik that kin appeared to be a security.

Earlier this year, the company told the Wall Street Journal it planned to take the SEC to court if the agency brought an enforcement action against the project.

Last month, Kik CEO Ted Livingston said the company had already spent $5 million engaging with the SEC. Kik then launched a $5 million “Defend Crypto” crowdfunding campaign to support a potential lawsuit.

Kin is used across a suite of mobile apps. Kik has been using its ICO funds to support the development of new marketplaces for people to earn and spend the cryptocurrency, which runs on its own blockchain.

In a statement Tuesday, Livingston said:

“This is the first time that we’re finally on a path to getting the clarity we so desperately need as an industry to be able to continue to innovate and build things.”

Kin’s price tanked on the news of the SEC lawsuit, falling more than 25 percent within two hours of the lawsuit’s announcement.

You can read the full filing below.

This is a breaking news story and will be updated with additional information.

Kik Sec Filing by CoinDesk on Scribd

Brady Dale contributed reporting.

SEC image via Shutterstock

Blockport, a cryptocurrency exchange based in the Netherlands, has been been forced to close due to lack of operating capital, but it’s vowed to return.

According to a filing reported by The Next Web, the official operating entity, Blockport BV, was declared bankrupt in a court in Amsterdam on May 21. The platform ceased services at the end of May, as announced in a blog post (although the website is still online as of writing).

In the post, co-founder and chief product officer Sebastiaan Lichter said that following the exchange’s failed security token offering – which had a €1 million ($1.12 million) soft cap – “we have decided to drastically scale down our operations and development.”

Lichter wrote:

“Running our operations and platform as-is without a substantial investment is currently not an economically viable and responsible option.”

As the exchange currently cannot generate sufficient revenues, he said the focus is now on “expanding the platform with unique and value-adding technological features, that strengthen our business case for a potential future restart.”

While the operating entity is now bankrupt, Lichter said this would not affect its efforts to prepare for a “restart” of the platform.

He continued:

“We still see a lot of opportunities in this industry and have built a top performing trading platform that many people love to use and which has had almost zero downtime or issues since we launched it in the summer of 2018.”

Customers were given prior warning to withdraw any remaining funds, and according to the post, can still withdraw by emailing support.

Amsterdam image via Shutterstock

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Bitcoin’s (BTC) price pullback seems to have stalled near historically strong support, but a bounce, if any, could be shallow.

The cryptocurrency market leader dived below $8,000 in the Asian trading hours today and almost tested the crucial 30-day moving average (MA) support, currently at $7,707, according to Bitstamp data.

As of writing, BTC is changing hands at $7,940, representing a 5 percent drop on the day, having hit a low of $7,932 earlier today.

The minor recovery from levels near the 30-day MA is hardly surprising and could be extended further. After all, the average has consistently reversed price pullbacks over the last four months.

This time, however, BTC, may not be able to rise all the way back to $9,000, as the short duration technical charts are biased bearish and the weekly chart is flashing signs of buyer exhaustion, as discussed yesterday.

Further, the broader market is also looking exhausted. Notably, litecoin (LTC) is struggling to decouple from BTC with a move higher, even though it is set to undergo mining reward halving in August. The supply altering event tends to put a bid under the cryptocurrency months in advance.

Daily chart

BTC breached the 30-day MA on Feb. 8 and has established multiple bullish higher lows (marked by arrows) along that line ever since. Notably, every bounce ended up violating the preceding price high.

The price is again attempting a recovery from the 30-day MA as seen above. However, the bounce will likely be shallow or the cryptocurrency could find acceptance below the average later today, as the 14-day relative strength index (RSI) has dipped below 54.50, confirming a double top breakdown – a bearish reversal pattern.

The moving average convergence divergence (MACD) histogram is charting bigger bars below the zero line – a sign the bearish move is gathering strength.

Further, the price drop seen in the last 24 hours validated the bullish-to-bearish trend change signaled by the bearish outside day candle created on May 30.

Weekly chart

The doji candle created last week represents buyer exhaustion. The 14-week RSI is also reporting overbought conditions with an above-70 print.

Meanwhile, the money flow index – also known as volume-weighted RSI – has almost risen to 100 for the first time on record. A reading above 80 represents overbought conditions.

The current print of 98, therefore, indicates the recent rally is extremely overstretched and significant correction is overdue.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; charts by Trading View

Multiple criminal investigative agencies within the U.S. are looking into the circumstances of the now-defunct Canadian crypto exchange QuadrigaCX.

According to a press release published Monday, the FBI, the Internal Revenue Service’s Criminal Investigation division (IRS-CI), the U.S. Attorney General’s office for the District of Columbia and the Department of Justice’s Computer Crime and Intellectual Property Section are investigating the exchange, which filed for bankruptcy following the death of its founder and a months-long civil rehabilitation process.

The FBI published a questionnaire for victims, asking for personally identifying information, contact information and details about their QuadrigaCX accounts.

“If you have questions or concerns about your QuadrigaCX account, or if you believe you are a victim, please complete the below questionnaire,” the release says, adding:

“Your responses are voluntary but would be useful in the federal investigation and to identify you as a potential victim. Based on the responses provided, you may be contacted by the FBI and asked to provide additional information.”

The FBI and IRS-CI are legally required to provide victims of federal crimes with information, assistance and other resources.

According to Fortune, the FBI has been investigating Quadriga since at least March, alongside the Royal Canadian Mounted Police.

Quadriga’s founder and CEO, Gerald Cotten, died during a charity trip to India in December, according to his widow, Jennifer Robertson. A month later, the exchange filed for creditor protection, with professional services firm Ernst and Young (EY) acting as the court-appointed monitor for the exchange. Though the exchange was said to be holding some $134 million in crypto, EY has been unable to locate any of its holdings (aside from 103 bitcoin accidentally transferred to an inaccessible wallet).

As of last month, EY said the exchange has roughly $21 million in assets (including fiat currencies), but could owe customers as much as $160 million.

The exchange began bankruptcy proceedings in April.

FBI logo image via Jonathan Weiss / Shutterstock 

French retail giant Carrefour has attributed a recent increase in sales to its use of blockchain tracking.

Carrefour’s blockchain project manager Emmanuel Delerm told Reuters on Monday that the use of blockchain ledger technology to track meat, milk and fruit from farm to supermarket has increased sales of these products.

According to Delerm, blockchain tracking has been particularly successful in China, where shoppers are more used to scanning QR codes. The initiative likewise proved to be popular in Italy and France, where buyers reportedly spend as long as 90 seconds reading merchandise information.

With the firm’s blockchain tracking – built with IBM Blockchain – customers can scan a QR barcode on a product with their phone and obtain information such as its date of harvest, farm location and owner, packing date, how long it was transported, and tips on how to prepare it.

“The pomelo [a citrus fruit] sold faster than the year before due to blockchain. We had a positive impact on the chicken versus the non-blockchain chicken,” Delerm said.

Carrefour initially launched blockchain information for 20 items, including chicken, eggs, raw milk, oranges, pork, and cheese, according to the report. Now, the retailer intends to add 100 more products to the system, particularly focusing on products for which consumers want reassurance, such as baby and organic products.

The tech creates a “halo effect,” meaning if shoppers feel they can trust one Carrefour product, they will also trust other items, Delerm said.

There are still challenges to blockchain tracking however – particularly in tracking fruit and vegetables sold loose and sourced from a number of farms. There is also some resistance from farmers to sharing too much information, according Delerm.

Carrefour is also working with Nestle, allowing the Swiss food and drinks giant access to its blockchain data for its Mousline potato puree so buyers can see that the produce is sourced from French farms

Carrefour image via Shutterstock

Cadence, which puts commercial debt into ERC-20 tokens, will soon be listed on Bloomberg Terminal.

In a first for a blockchain-based financial instrument, Cadence has obtained a Financial Instrument Global Identifier (FIGI). With this new designation, Cadence becomes easy to research and trade for the broad array of financial professionals working with Bloomberg Terminal, the market-leading software. Each FIGI record carries with it metadata such as interest rate, maturity schedule and instrument type.

In Cadence’s case, it also includes the smart contract address on Ethereum.

Cadence works with the sort of debt businesses need to cover short-term gaps in cash flow. Founder Nelson Chu said this industry has run on Excel spreadsheets and phone calls, making it very opaque.

Chu told CoinDesk:

“We are creating an immutable ledger that houses all asset-level performance data at every stage of its lifecycle, from inception through maturity. This creates an oracle of asset performance data that every counterparty in a private credit transaction can reference to accurately price, structure and invest.”

The firm has made eight issuances so far, with one-month, three-month and nine-month maturities, and automatic rollovers. All will be viewable on the terminal.

Richard Robinson, Bloomberg’s data standards lead, said in a press release:

“The assignment of a FIGI to digital assets is a natural and simple example of the standard’s native utility. It is proof that FIGI can easily extend to new, even esoteric financial instruments.”

The FIGI was first developed as the Bloomberg Global Identifier (BBGID) before being open-sourced in 2014 and embraced by the computer industry’s standards consortium.

Cadence is a relatively new product, one which will allow investors to participate with investments as small as $500 in fairly short-term, high-yield commercial debt instruments. It has been in private beta since January.

All of Cadence’s issuances will be viewable under the ticker symbol CDGRP on the terminal, not to mention the ethereum blockchain. Chu said:

“We’re creating a level of transparency and efficiency that has simply never been possible before.”

Cadence CEO Nelson Chu image via Twitter/Cadence