The U.S. Securities and Exchange Commission is suing Canadian messaging and cryptocurrency company Kik Interactive for allegedly making an illegal $100 million securities offering through the launch of its Kin digital tokens. Kik, however, was already preparing for a court battle with the agency to determine whether the legal test that defines securities that come under the agency’s jurisdiction applies to initial coin offerings.

The SEC claims that Kik should have registered the Kin ICO with the agency as a security since it met the definition of an offering under the so-called Howey test. Established in Securities and Exchange Commission v. W.J. Howey Co., the four-prong test determines when an asset qualifies as an “investment contract” based on if an exchange includes an investment of money, a common enterprise, an expectation of profits and is dependent on the efforts of others.

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