Esports betting platform, Unikrn, was slapped with a class-action lawsuit last week alleging the start-up bypassed security measures by offering UnikoinGold Tokens (UKG) to the public. Unikrn boasts a couple of high-profile investors already such as Dallas Mavericks owner Mark Cuban and crypto-billionaire Brock Pierce, therefore the news attracted some extra attention.
Unikrn is being taken to court by Las Vegas resident John Hastings, a dissatisfied investor who reportedly put 10 Ethereum towards UKG, worth roughly $2,800 at the time. Hastings argues that continuous offerings of these tokens to the public with the ability to resell them indicates that these UKG public crowd sales were a financial investment, thus violating Securities and Exchange Commission (SEC) regulations.
“In reality, the UnikoinGold ICO was an offer and sale of securities. Indeed, it is evident that investors were purchasing UKG Tokens with the expectation that those tokens would increase in value and become worth more than the virtual currencies invested.” Hasting alleged in the case filing.
There was also reference of an SEC investigative report in July that pinned cryptocurrency DAO Tokens as blatant securities. Hastings argues that the case with DAO tokens being subject to federal security laws clearly applies to Unikrn and UnikoinGold. Among all the allegations, Unikrn CEO Rahul Sood has remained relatively quiet, only mentioning that his company would “vigorously defend” its interests in court, backed by Seattle law firm Perkins Cole.
Unikrn is the latest in a string of ICO-funded projects to be hit by a legal discord by investors looking to recoup some loses; the crypto-token, UKG, had at one point been worth $2.47(£1.90) but has since plummeted to just around a nickel.
Esports Insider says: All in all, Hastings seems to have some valid points in his argument – citing the DAO Tokens as a parallel to UnikoinGold is a strong example that might land the betting platform in some hot water. This is one for the courts though, we’ll have to see what the judges chalks this case up to before we can say more about it.