The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against messaging mobile application Kik for allegedly operating an unregistered securities sale during its 2017 initial coin offering (ICO) of its kin token.

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“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.”

According to the SEC, Kik had reported losses for years. The company’s management predicted internally that it would run out of money in 2017.

The company’s average losses totaled about $30 million a year.

Kik sold its kin token to the public, with discounts available to larger purchases, raising more than $55 million from U.S. investors.

The SEC alleges the tokens traded recently at approximately half of the value public investors purchased them for during the ICO.

Last month, Kik CEO Ted Livingston stated the company had already spent $5 million, later launching a “Defend Crypto” crowdfunding campaign, raising $5 million to support a possible lawsuit.

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.”

The price of the kin token has fallen more than 25 percent after the lawsuit’s announcement.

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