In a sadly familiar tale, the US Securities and Exchange Commission (SEC) was forced to stop another Initial Coin Offering or ICO. This was due to the operators of the ICO has failed to register these tokens as a security to the US regulator. The principals of Unikrn, a gambling and eSports gaming platform, has agreed to settle charges with the SEC. The SEC had concluded that the conduct of the Unikrn operators was that of unregistered broker-dealers.

Raising $31 million In Unregistered ICO

Unikrn stands as a company created back in 2017 and is based in Washington, offering esports fans, bettors, and gamers all a blockchain-based marketplace.

As stipulated in the order, the company itself had raised an impressive $31 million by way of an ICO, where Unikrn had sold its UnikoinGold (UKG) tokens. This ICO was developed to help develop additional applications further within the gaming platform at large.

Key Stipulations Made

The SEC was careful to stipulate, however, that it had not accused Unikrn of fraud. Instead, the SEC is accusing Unikrn of failing to register their tokens as securities. In this agreement made, Unikrn has agreed to return the funds to its harmed investors, doing so by way of Fair Fund, an investor compensation fund.

This is noteworthy due to how the SEC has handled other crypto-related settlements, in the past. The SEC mandated different mechanisms in order to compensate investors that took part in the ICO. one of the more notable methods is either mandating the ICO to go through a claims process or have them voluntarily return all the ICO’s proceeds.

The Nail In The Coffin

Unikrn had promised its investors that this ICO would help facilitate a secondary trade market for the tokens themselves. This would offer the investors an exit strategy, where they could cash out their holdings as the demand, and subsequently the price increased for the token.

Due to this, the SEC had concluded that UnikoinGold was securities, with Unikrn selling these securities without properly filing for registration or even for the qualification of registration exemption. However, Unikrn had self-reported its product to the watchdog, in turn.

The SEC made it clear that Unikrn had agreed to halt the offering completely, further paying back all the fees that they had collected. In order to resolve the allegations of the SEC, Unikrn had agreed to pay a penalty of $6.1 million.