Disgruntled ICO investor takes Unikrn to court
Unikrn, an esports betting startup based in Seattle, has been slapped with a class action lawsuit by an investor who accused the company of breaching U.S. securities laws during its initial coin offering (ICO) in 2017.
The suit, filed by Las Vegas resident John Hastings in King County Superior Court in Washington State court last Aug. 13, claimed that Unikrn and its founder, Rahul Sood, sold unregistered securities to the public via its ICO for blockchain-based UnikoinGold (UKG) token.
Hastings said he invested 10 ETH, worth about $2,800 at the time, into the ICO in September 2017. In his lawsuit, Hastings asserted that the UKG should be treated as securities, claiming investors were made to believe that the tokens “would increase in value and become worth more than the virtual currencies invested.” He further argued that Unikrn has “crafted a flimsy façade that UKG tokens are not securities by claiming they are ‘utility tokens.'”
In a reaction to the suit, Sood conceded the company has been made aware of the suit and will be represented by Seattle Law firm Perkins Coie who will “vigorously defend” Unikrn. He told GeekWire that the company will continue “building the most amazing blockchain-powered esports experiences on Earth. We are focused on that, even in the face of meritless litigation like this.”
Sood previously explained the difference between taking venture funding and investing in an ICO, saying, “Venture funding is when you sell a piece of equity to a venture fund… Token sales are when you sell a token what works in your platform. It’s not an investment because it’s completely liquid. It’s almost like you are buying a specific currency that you can trade with and use on our platform.”
Unikrn collected 112,720 ETH during its 2017 ICO, which was worth $31 million at the time. From information gathered from records filed with the U.S. Securities and Exchange Commission (SEC) in October 2017, the esports startup raised an additional $16 million by offering SAFTs (Simple Agreement for Future Tokens).
Unikrn was founded in 2014 and currently has about 90 employees in offices in Seattle, Sydney, Berlin and Las Vegas. In 2017, the company announced that it’s developing its own token for a blockchain-based betting platform. Unikrn announced early this year that the company is preparing for leviathan rollouts throughout 2018, including crypto betting, 24-hour and real-time betting in applicable regions, re-entry into Australia, real-money betting, improved website gamification, expanded uses for the UnikoinGold token and more.
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