eSports betting operator Unikrn to pay $6.1M to settle SEC charges over its unregistered ICO
Business ı By Marivic Cabural Summers
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Unikrn, the Seattle-based online gambling, and eSports betting platform operator agreed to settle the charges filed against it by the Securities and Exchange Commission (SEC).
According to the SEC Order, Unikrn agreed to pay a penalty of $6.1 million to settle its complaint alleging that the company conducted an unregistered initial coin offering (ICO).
Allegations against Unikrn
Unikrn raised around $31 million from investors through its pre-same and ICO of UnikoinGold (UKG) token between June and October 2017. The company sold the tokens as investment contracts, thus considered securities. However, it did not register the offering or apply for an exemption.
The online gambling and eSports gaming platform operator told investors that it would the proceeds from its offering to develop additional apps for UKG tokens such as bingo, casino games, and eSports tournaments.
Additionally, Unikrn told investors that it will develop more features for its gaming platform including spectator betting and skills-based betting. It also promised investors to facilitate a secondary trading market and boost usage for the tokens so that its demand and value will increase.
Furthermore, the SEC found that the online gambling and eSports gaming platform operator required investors to sign an agreement that they were buying UKG tokens for their own use and not as an investment.
However, investors had reasonable expectations to obtain future profits based on Unikrn’s promotions of the offering. In fact, Unikrn engaged the services of a blockchain marketing firm to promote its unregistered ICO of UKG tokens. The marketing firm described the tokens as a “good long-term, hold.”
Unikrn violated the registration provisions of the Securities Act, according to the SEC.
Details of the settlement
According to the SEC, Unikrn agreed to settle without admitting or denying the allegations against it.
As part of the settlement, the online gambling and eSports gaming platform operator agreed to disable UKG within ten days of the date of the SEC Order.
Unikrn will pay a penalty of $6.1 million, which will be returned to affected investors. It will also request UKG’s removal from all digital asset trading platforms.
"The securities registration and exemption framework [are] designed to ensure investor protection and access to material information, while also facilitating capital formation. Failure to follow this framework harms investors and our markets. This resolution allows us to return substantially all of Unikrn's assets to already-harmed investors and includes measures to prevent future sales to retail investors, including the disabling of the tokens,” said Kristina Littman, Chief of the SEC Enforcement Division's Cyber Unit in a statement.
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