US District Court Judge Alvin Hellerstein today granted the US Securities and Exchange Commission its motion for summary judgement against Kik Interactive, which the SEC alleged offered Kin digital tokens in violation of the federal Securities Act.

The ruling comes more than six months after both sides filed motions for summary judgment, seeking to bring the court case to an end without trial. Now, the historic civil case is one step closer to its inevitable conclusion: penalties.

Kik is a Canadian company with a messenger app of the same name. It saw creating its own cryptocurrency, Kin, as a way of monetizing app usage.

Kik sold $50 million in Kin tokens from June to September of 2017 as part of a private pre-sale to 50 investors. As part of this “Simple Agreement for Future Tokens,” or SAFT, investors understood they were getting in at a discount. They explicitly agreed that they were buying a security.

Later in September, Kik held a public sale of the token, during which it brought in an additional $49.2 million.

When Kin was announced, the SEC had yet to create rules for governing cryptocurrencies like it. The agency’s DAO Report, which set some rough guidelines for when token offerings could be considered securities, came out in July 2017, as Kik was putting its sale into motion.

Two years later, the SEC charged Kik with violating Section 5 of the Securities Act—it had offered and sold securities in the US without being registered to do so.

The judge agreed, though he noted there was little in the way of judicial precedent guiding him.

The crux of the case surrounded whether the sale met the Howey Test, a nearly century-old yardstick for identifying a security: There must be “i) an investment of money ii) in a common enterprise iii) with profits to be derived solely from the efforts of others.”

While both Kik and the SEC agreed that money was invested, they disagreed on parts two and three. 

In terms of a common enterprise, Judge Hellerstein wrote in his order for summary judgment, “Kik established a common enterprise. Kik deposited the funds into a single bank account. Kik used the funds for its operations, including the construction of the digital ecosystem it promoted.”

As for part three, there has to be an expectation of profits. Judge Hellerstein again said there was, using the words of Kik CEO Ted Livingston against him: “In public statements and at public events promoting Kin, Kik extolled Kin’s profit-making potential. Kik’s CEO explained the role of supply and demand in driving the value of Kin.”

The judgment doesn’t quite bring the case to a close. Instead, it mandates that “the parties shall jointly submit a proposed judgment for injunctive and monetary relief” by October 20.