Blockchain Betting Platform Unikrn Hit With Class Action Lawsuitbr>
E-sports betting platform Unikrn has been hit with a class action lawsuit for allegedly violating US securities law.
Founded in 2014 by gaming industry veterans Rahul Sood and Karl Flores, Unikrn is an esports betting company, based in Las Vegas, Nevada with offices in Seattle, Sydney Australia and Berlin, Germany. In October 2017, the company raised roughly $31 million in an initial coin offering (ICO) of its UnikoinGold Tokens (UKG). The ICO was backed by Mark Cuban, Brock Pierce, Blockchain Capital, Pantera Capital, and CoinCircle.
In a lawsuit filed at a court in Washington State on Aug. 13, Las Vegas resident and lead plaintiff John Hastings, who invested 10 ethereum into Unikrn’s ICO, alleged that Unikrn and its founders sold unregistered securities to the public during its ICO. The plaintiff argued that the UKG tokens should be treated as securities since investors were led to expect that the tokens “would increase in value and become worth more than the virtual currencies invested.”
“Defendants have crafted a flimsy façade that UKG Tokens are not securities by claiming they are utility tokens,” according to the suit. “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.”
The complaint said that investors made their investment with a reasonable expectation of profits, but have sustained substantial losses with the value of UKG Tokens declining substantially since the ICO. The price of the UKG Token has fallen from thirty cents ($0.30) at the official ICO to about five and a half cents ($0.055) as of the filing of the complaint, losing over eighty percent of its value.
In a statement, Sood said the company is aware of the lawsuit and has retained law firm Perkins Coie to “vigorously defend” the firm. However, Sood declined to comment on the specifics of the case. He said the company will keep its head down “building the most amazing blockchain-powered esports experiences on Earth. We are focused on that, even in the face of meritless litigation like this.”