Another ICO startup just got hit with a class action lawsuit. A Seattle e-sport betting startup named Unikrn which started an initial coin offering sometime last year is now in legal troubles for violating securities laws in the United States.
A Las Vegas inhabitant and lead plaintiff John Hastings filed the case at a court in Washington State on Aug. 13, asserting that Unikrn and its author Rahul Sood sold unregistered securities to the public using the ICO for its blockchain-based UnikoinGold Tokens (UKG).
Hastings, one of the participants in the ICO, contended that the UKG tokens ought to be dealt with as securities since investors were made to believe that the tokens “would increase in value and become worth more than the virtual currencies invested.”
He also claimed that the startup “crafted a flimsy façade that UKG Tokens are not securities by claiming they are ‘utility tokens.”” Geekwire quoted Sood on Thursday saying that the company was “aware of the lawsuit ,” but he declined to provide further details.
In view of records from Unikrn’s filing to the U.S. Securities and Exchange Commission (SEC) on Oct. 6, the firm reportedly raised $16 million from registered investors through a venture contract known as a SAFT – Simple Agreement for Future Tokens.
Established in 2014, Unikrn planned to launch its own token for a blockchain-based wagering platform in 2017 and as a result it started the ICO to raise the necessary funding for the project. .
Sponsored by “Shark Tank’s ” Mark Cuban, the ICO was the first such initiative backed by the proprietor of the Dallas Mavericks NBA franchise. .
Following the token deal, UKG was listed on a handful of crypto trading platforms including U.S.- based Bittrex.
The filing of the case comes at a time when the price of UKG plummeted from its high of around $2 early this year to $0.05 as of press time,as per information from CoinMarketCap.
The case is the latest in a series of lawsuits from investors seeking redress against ICOs they’d put money in.
In a related development, a California court last week dismissed an application to strike out a legal challenge against Tezos Foundation’s ICO that was brought before the court on charges that it violated securities laws in the U.S.