An eSport betting startup based in Las Vegas faces allegations of its initial coin offering negating the regulations of SEC. The suit was filed by John Hastings, a resident of Las Vegas who placed 10 Ethereum into Unikrn’s ICO last September. The allegation is counted as merit-less by the CEO of Unikrn, Rahul Sood.
Negating SEC Rule with ICO
John Hastings, a resident of Las Vegas, has filed a suit against Unikrn an eSport betting platform over the subject of the definition if their initial coin offering that took place last year. The plaintiff placed a total of 10 ETH in the ICO.
John Hastings see the subject of the definition of the ICO by the Unikrn team as a means to evade the SEC regulations. Hastings tagged ICO as a means of security purchase while Unikrn tagged it as a purchase of token to conduct transactions on its platform.
Hastings stated 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.”
The Contrasting Views Of ICO, Token or Venture Fund
While the suit is filed against Unikrn, the firm views its ICO as a token offered and not a venture fund. The CEO of Horn Sood gave the clarity of this in an interview where he stated that:
“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.”
The plaintiff, however, views the ICO as a form of security and tagged the company use of token for it as a means of violating SEC regulations. The defendant counts the allegations as baseless and has employed Seattle firm Perkins Coie to defend its case.
Initial coin offering is a means of raising fund for cryptocurrency project whereby a share of the project is sold ahead in exchange for funds, which can later be used to trade when the startup is established. ICO, though is a credible means for startups to emerge and get established; it has equally become a tool in the hand of scammers in the cryptocurrency community with series of fraud cases reported.