eSports start-up Unikrn sued

Media reports from the United States Friday indicate that eSports start-up Unikrn and its high profile founder Rahul Sood are facing litigation from Las Vegas resident John Hastings, who claims that the company’s Bermuda based subsidiary attempted to avoid federal securities laws in its initial coin offering (ICO) by claiming its currency represented a “utility token” rather than an investment intended to bring profit for buyers.

Hastings, who is seeking class action status in his petition to King County Superior Court, invested 10 Ethereum ( a cryptocurrency) in Unikrn’s ICO last year and names Unikrn, Sood and marketing manager Karl Flores in his suit.

Unikrn reportedly raised $31 million in the ICO. Hastings claims that the value of the UnikoinGold cryptocurrency has dropped from $0.30 when the Unikrn ICO began last year to just under five cents.

“Defendants have crafted a flimsy façade that UKG Tokens are not securities by claiming they are utility tokens,” Hastings claimns in his filing, adding that “in reality, the UnikoinGold ICO was an offer and sale of securities. Indeed, it is evident that investors were purchasing UKG Tokens with the expectation that those tokens would increase in value and become worth more than the virtual currencies invested.”

Sood has acknowledged awareness of the Hastings action and says the company has hired a top Seattle law company to defend it, without going into further detail.

The Unikrn founder has previously pointed out the differences between investment and utility to the publication Geekwire, observing:

“Venture funding is when you sell a piece of equity to a venture fund. Token sales are when you sell a token that works on your platform. It’s not an investment because it’s completely liquid. It’s almost like you are buying a specific currency that you can trade with and use on our platform.”

Hastings argues that previous statements by Unikrn illustrate a view that currency is an investment; he argues that UnikoinGold is listed on major exchanges giving it a price in U.S. dollars.

In addition to its ICO, Unikrn has raised $10 million in venture funding from  investors. According to Geekwire the company employs about 90 people in offices in Seattle, Berlin, Sydney, and Las Vegas.

Sood says Unikrn has been building out a new back-end blockchain called Unikrn Jet that promises to speed up transaction times and power live betting across major eSport titles. The company is also working on an interface that makes it easier to buy its cryptocurrency and is reportedly close to securing a licence to allow cryptocurrency betting across multiple countries.

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