The cryptocurrency startup Unikrn, which raised $31 million in its 2017 ICO, will pay a penalty for unregistered sale of securities, the U.S. Securities and Exchange Commission (SEC) said.
The regulator found that from June to October 2017 Unikrn sold securities in the form of UnikoinGold (UKG) tokens without the required registration. Representatives of the project did not admit nor deny guilt, but agreed to settle the claims.
Unikrn agreed to block the UKG tokens and delist them from all cryptocurrency exchanges, as well as pay a penalty of $6.1 million. According to the SEC, the amount disclosed was almost all of the startup’s funds.
“This will allow us to return Unikrn assets to affected investors and prevent future token sales,” said the Commission.
Hester Peirce, the SEC commissioner known for her pro-cryptocurrency stance, criticised the agency’s decision. She said Unikrn was not accused of fraud, but only of a registration violation.
“We must avoid enforcement actions and sanctions that stifle innovation and suppress economic growth. I believe this move and the accompanying sanctions will have similar consequences,” Peirce noted.
Earlier, Unikrn raised 112,720 ETH ($31 million at the rate at the time) to develop a platform for esports betting. Additionally, SAFT agreements worth $16 million were purchased by accredited investors. The project enjoyed the backing of billionaire and well-known venture capitalist Mark Cuban.
In 2018, a class-action lawsuit was filed against Unikrn, accusing the founders of selling unregistered securities in the form of UKG tokens. Plaintiffs also claimed that investors were misled by promises of future token price appreciation.
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