SEC fines crypto-based betting operator Unikrn over ICO
Understanding the finer points of large corporations’ finances isn’t easy. More often then not even for the companies themselves.Between mistakes, human error, and the odd deliberate deception, issues are more common than you may think – and sometimes, these issues lead to steep fines from the relevant governing body.
Exactly that just happened to crypto-currency based esports betting provider Unikrn Inc. The online esports gaming and gambling platform saw some issues with its ICO setup and now has to pay a hefty fine. Specifically, their Initial Coin Offering or ICO was performed without the proper authorization from the Securities and Exchange Commission.
The token that Unikrn offered is called UniKoin Gold or UKG, and its ICO raised about $31 million in late 2017. Now the company has to pay fines covering a substantial section of that investment. The SEC ordered them to pay no less than $6.1 million.
The future of Unikrn
Apparently, the company planned to use the ICO funds in order to improve the features on its platform. Unikrn also assured its investors that they would look into getting the UKG accepted on different platforms, thus increasing demand and later the value of the coins.
That said, the company did not register with the SEC beforehand, and did not qualify for an exception to doing so either, thus violating the SEC rulings and putting investors at greater financial risk.
The SEC Enforcement Division’s Cyber Unit Chief, Kristina Littman, said:
“The securities registration and exemption framework is designed to ensure investor protection and access to material information, while also facilitating capital formation. Failure to follow this framework harms investors and our markets. This resolution allows us to return substantially all of Unikrn’s assets to already-harmed investors and includes measures to prevent future sales to retail investors, including the disabling of the tokens.”
The fine itself won’t be paid directly to the SEC, but will rather benefit some of the investors of the platform itself. The money will be placed in a central fund and then given back to the affected investors. Unikrn has already agreed and is moving forward with making the payment a reality.
This means that most if not all of their assets are going towards this reparation payment. Since it was accepted without argument from Unikrn Inc, the company also agreed to disable the existing UKG token system. They are taking steps to have it eliminated from every trading platform it is currently on.
Today we're retiring Unikrn Loot, Unikrn Connekt, UnikoinSilver & UnikoinGold.
The SEC will operate a fund for token holders who would like a refund — to participate, please withdraw your UKG from Unikrn to a private wallet.
— UnikoinGold (@UnikoinGold) September 15, 2020
This spells the end of the UniKoinGold currency, and due to several unspecified settlements between Unikrn Inc and the Washington State Department of financial institution as well as the SEC, most likely the end of several more if not all Unikrn products. Services like Unikrn Loot, Connekt, UniKoinSilver, and of course the main UKG service will be shut down.
Investors are urged to withdraw their UKG to a private wallet so that they may receive a refund. While this is a serious blow to the crypto world and may also impact the esports and sports betting industries, it’s not a reflection on the trustworthiness of related services – the SEC rule violation was exclusive to the Unikrn services.