That same year, Kik Interactive, a Canadian mobile news start-up, raised US$50 million after filing securities with the SEC and selling SAFT securities to accredited investors. However, when the same company launched its second round of financing a month later, they did not do so through SAFT agreements and instead sold digital tokens that could be used as utilities for its service. The company argued that tokens were no longer an investment. Now, two years later, Kik is facing an SEC complaint about a $100 million unregistered ICO. This shows why more and more crypto-projects are turning to SAFTs to raise funds – everything else seems to mean legal recursions on the street. Developers of a decentralized token-based system each create a recipient contract (SAFT) with their authorized investors. The certificate includes the agreement that the investor now financially supports the project and receives tokens at a reduced rate at a later date. The company that develops the token network registers with the SEC, but does not currently issue tokens. Then, the founders and their team use the financial resources acquired to develop the network. At first, investors do not receive tokens. The absence of guidelines for sales of tokens, SAFT and secondary futures contracts on SAFTs means that it is virtually impossible to determine with certainty the tax treatment of the various instruments in the United States and to determine whether a constructive sale takes place at the conclusion of one or more of these agreements. Therefore, SAFT holders entering into a secondary futures contract for the FTSA should consult with their tax advisors to determine whether the conclusion of the secondary futures contract on the basis of the actual facts of the transaction will likely lead to a constructive sale of the FTSA for tax purposes and the applicable tax reporting obligations.
The Tribunal rejected Kik`s argument that the « joint venture » had not been met because the terms of its agreement with the IPO participants kin expressly denied any contractual obligations pending after the Distribution of the Kin and that IPO participants could sell their Kik whenever they wished.