Unikrn, a gambling agency that specializes in offering betting on the outcome of electronic sports (eSports) is now caught in a legal dispute with an investor. As the accusation stands, Unikrn used a number of ways to avoid regulations pertaining to the sale of the platform’s own cryptocurrency.
The Case and the Facts
As most blockchain projects, Unikrn has launched an exchange currency of its own based on the public ledger technology, namely the UnikoinGold. The token has been designed as a “high-security” and “affordable” gaming option, which can facilitate betting transactions. Unikrn has also stated, using its official website, that the token will additionally help provide visitors with a better-quality gaming experience.
Launched back in September, Unikrn delivered its first taste of the eponymous exchange currency powered by the Ethereum blockchain network. And whilst the platform has been enjoying a relative success, one of the investors, John Hastings, has decided to pursue legal recourse in order to fight the company on an issue he thought important.
Just on Monday, Mr. Hastings filed suit in King County, Washington, against Unikrn and the company’s founders who have been known champions of the pro-gambling lobby, namely Rahul Sood and Karl Flores. However, the pair have been prepared as they have already mentioned in the past that they have retained the services of Perkins Coie, a law firm, in order to stave off the allegations mounted against them by Mr. Hastings.
Where’s the Issue?
Mr. Hastings believes that because the tokens were offered during a private sale to a select number of investors, the sale of the token was in fact an investment. The sale occurred before it went public, meaning that this was against the mandated rules and regulations of the U.S. Securities and Exchange Commission (SEC).
The defense of Unikrn is coached in the common legalese used in similar cases, i.e. the tokens are in fact “utility tokens,” whereas the real purpose of the Initial Coin Offering (ICO) was to sell securities which is well against the grain of SEC. Mr. Hastings also cited a separate case where SEC ruled against DAO Tokens and said that the same case can be made in the upcoming lawsuit.
Unikrn has definitely had a good time. The platform began operations with the equivalent of $31 million following its successful two-fold ICO. A few months of steady growth have been relatively calm and Unikrn continued to expand its operations. The company even obtained a Malta Gaming License, becoming one of the few eSports betting agencies to do so.
Facing Its Peers
And yet Mr. Hastings does have a point in the case against Unikrn insofar as a private sale had indeed taken place. Mr. Hastings may have been unhappy with his own share in the company or, less likely, he may indeed find the actions taken by Unikrn to be unlawful and to deserve a closer scrutiny in court. Whatever the case, Mr. Hastings is now on the offensive and Unikrn are already lawyered up.
Whatever may come out of this, it’s not likely to end well nor soon.