Unikrn sued over UnikoinGold ICO by former investor
Lawsuit alleges ICO violated US securities laws
Esports betting company Unikrn is being sued by a former investor in its cryptocurrency, UnikoinGold, who claims that its Initial Coin Offering (ICO) violated US securities laws.
The plaintiff, John Hastings, used 10 Ethereum coins during Unikrn’s ICO of UnikoinGold to purchase approximately $2,800 worth of the new cryptocurrency in September 2017. The currency later went on to raise over $31m from its ICO alone.
Hastings is suing for damages, alleging that Unikrn presented UnikoinGold as a currency which could be used to place bets on eSports via the Unikrn website. The lawsuit further alleges that buyers of the currency were under “the expectation that those tokens would increase in value and become worth more than the virtual currencies invested” which fits the definition of a security under US law.
It alleges that the defendants “have crafted a flimsy façade that UKG Tokens are not securities by claiming they are utility tokens” and that 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.”
It further alleges that Unikrn attempted to avoid federal securities laws by claiming its UnikoinGold represented a “utility token” or a digital coupon that could be exchanged for services and items on the company’s platform rather than a traditional investment intended to bring profit or loss.
The lawsuit was filed in King County, Washington against Unikrn, a Bermuda subsidiary of the company, Unikrn CEO Rahul Sood and CMO Karl Flores and contends that the action violates Sections 12a and 15 of the US Securities Act (1933).
Unikrn CEO Rahul Sood declined to comment on the specifics of the case but said that the company was committed to “building the most amazing blockchain-powered eSports experiences on Earth. We are focused on that, even in the face of meritless litigation like this.”