Seattle startup Unikrn can pay a $6.1 million superb and disable its UnikoinGold (UKG) cryptocurrency to settle Securities and Exchange Commission charges that the eSports betting firm carried out an unregistered preliminary coin providing in violation of federal securities legal guidelines.
Unikrn, led by CEO Rahul Sood, a veteran entrepreneur who beforehand oversaw Microsoft’s enterprise capital arm, agreed to pay the penalty with out admitting or denying the SEC fees.
The corporate, which has been backed by superstar traders together with Mark Cuban and Ashton Kutcher, raised $31 million in the initial coin offering three years in the past. In charging the corporate, the SEC stated Unikrn “didn’t register the providing or qualify for an exemption.”
The $6.1 million settlement represents “considerably all the firm’s property,” the SEC said in a news release.
In a statement on its web site, Unikrn stated the SEC established pointers after the ICO which “utilized retroactively, raised many questions as regards to the way forward for UKG.”
“Unikrn’s precedence was in rising and innovating the Unikrn platform whereas looking for widespread floor with the SEC that will permit us to advertise the deserves of UKG,” the corporate stated. “Wanting that, our different possibility was to succeed in settlement on UKG’s previous and discontinue it shifting ahead in order that our energies may very well be successfully directed.”
In a public statement, SEC Commissioner Hester Peirce stated she disagreed together with her colleagues’ willpower that the ICO constituted a securities providing.
“Whereas many SEC enforcement actions on this house embody allegations of fraud, Unikrn falls throughout the narrower class of token issuers charged solely with violating Part 5 of the Securities Act,” Peirce stated. “In different phrases, Unikrn is alleged to have supplied and bought its tokens in an unregistered providing and in a way that didn’t qualify for an exemption; it’s not alleged to have engaged in any fraud in doing so.”
She continued, “The problem of discerning a transparent authorized line is particularly troublesome with respect to new types of enterprise and novel applied sciences. Entrepreneurs could also be pressured to decide on between unpalatable choices: expending their restricted capital on expensive authorized session and compliance or forgoing their pursuit of innovation because of worry of turning into topic to an enforcement motion. A regulatory protected harbor might resolve this sad dilemma.”
Kristina Littman, chief of the SEC Enforcement Division’s Cyber Unit, stated in an announcement that the settlement “permits us to return considerably all of Unikrn’s property to already-harmed traders and consists of measures to forestall future gross sales to retail traders, together with the disabling of the tokens.”
Requested concerning the monetary implications of the settlement, Sood advised GeekWire by way of electronic mail, “Unikrn will proceed to function our enterprise, we simply needed to get this put behind us so we might give attention to the long run. We’re not going wherever.”
Unikrn additionally reached a settlement with the Washington State Division of Monetary Establishments on fees of violating state registration provisions associated to its ICO.
ICOs are a controversial and fashionable mechanism for corporations — sometimes within the blockchain and cryptocurrency industries — to lift cash. Anybody, not simply accredited traders, should purchase tokens to be redeemed for objects on the issuing firm’s platform, or transformed to extra mainstream cryptocurrencies corresponding to Bitcoin and Ethereum.
Based in 2014, Unikrn runs an esports betting platform throughout the globe, permitting folks to wager on eSports matches very like they do with conventional sports activities.
“Though this settlement additionally means Unikrn might want to discontinue assist for UnikoinGold, it received’t cease us from innovating on funds and on the blockchain,” the corporate stated. “We’ll proceed to supply regulator-approved wagering and different companies with main currencies together with: Fiat Currencies, Bitcoin, BitcoinCash, Ethereum, Dogecoin, GUSD, USDC, PAX, BUSD, Ripple and others. Going ahead, Unikrn can even take into account different choices internationally based mostly on group suggestions.”
In 2018, Unikrn was sued on allegations that the corporate skirted federal rules throughout the ICO.
See the complete SEC order under.