Unikrn, a Seattle-based esports gambling startup is facing a class-action lawsuit arising from its initial coin offering (ICO) conducted in 2017 for UniCoin (UNIC).
The complaint was filed at Washington State’s King County Superior Court on August 13. The suit alleges that the company did not adhere to set federal regulations during the ICO.
The main plaintiff is John Hastings, a resident of Las Vegas. Hastings says he invested 10 Ethereum in the ICO, an amount worth about $2,800 at the time.
He expected that his investment would be worth much more after the token sale. However, that has not been the case, with the value of UKG plummeting from a high of $2.47 to just under 10 cents. UKG valued at $0.30 at the time of its ICO.
His complaint is against Unikrn, the start-up’s CEO Rahul Sood, and the Chief Marketing Officer Karl Flores.
The lawsuit wants the court to determine that they broke federal securities laws by offering UniKoin Gold (UKG) tokens to the general public as opposed to restricting it to accredited investors.
Court documents state that even though Unikrn referred to its UKG token as a ‘utility token’, they were indeed security tokens. Hastings’ complaint arises from the fact that he and others expected the token’s value to go up.
It is this expectation that qualifies UKG as a security and its offering to the public illegal.
“Defendants have crafted a flimsy façade that UKG Tokens are not securities by claiming they are ‘utility tokens.”
Rahul Sood and Karl Flores founded Unikrn in 2014 as an esports betting service. The company’s website states that it provides fans with a safe and legal platform from where they can play games or place bets on esports.
Some of the popular titles attracting fans to the platform include League of Legends, Counter-Strike: Global Offensive and Dota 2 among others.
The Unikrn ICO held in October 2017 managed to raise $31 million. The funds were meant for the development of UnikoinGold. UKG is a cryptocurrency used on the Unikrn platform to facilitate betting on esports or trading.
High profile backers of the crypto presale included Dallas Mavericks owner Mark Cuban and Anthony Di Iorio, founder, and CEO of crypto wallet company Jaxx. It also had the support of crypto-billionaire and EOS co-founder Brock Pierce.
Other supporters were Pantera Capital and Blockchain Capital, two of the foremost crypto hedge funds.
Mark Cuban, Ashton Kutcher, Indicator Ventures, and Binary Capital also raised $10 million in a venture capital funding for Unikrn.
Unikrn CEO Rahul Sood has said that the company will utilize the services of Perkins Cole, a law firm based in Seattle. He maintains that UKG isn’t a security and that they will defend the company’s interests vigorously.
Unikrn wants to build the world’s best blockchain-based platform for esports and already has plans in place to achieve that with its Unikrn Jet.
” We are focused on that, even in the face of meritless litigation like this,” said Rahul Sood.
The total supply for the UKG token is 1,000,000,000 while the current circulating supply is 141,472,371 UKG.
Unikoin Gold currently trades at $0.050 against the US dollar and 0.00000786 against BTC. The coin is ranked 398th on CoinMarketCap and has a market valuation of $7.1 million. Its average daily trading volume is about $80,000.