The U.S. Securities and Exchange Commission (SEC) settled unregistered securities offering charges against online gaming and gambling platform Unikrn for conducting an initial coin offering (ICO) in 2017. Commissioner Hester M. Peirce, an outspoken advocate for cryptocurrencies, dissented.
According to a press release Tuesday, the SEC alleged that between June and October 2017, Unikrn Inc. raised approximately $31 million through the UnikoinGold (UKG) token sale in violation of registration requirements.
The SEC’s press release said that while the firm promised to use its funds to add more features to the platform and develop additional applications, it failed to register the sale of said tokens, which the SEC alleges were offered as investment contracts.
The statement adds that Unikrn has agreed to settle the charges, without admitting or denying them, by paying a $6.1 million penalty to be distributed among investors. The SEC said the $6.1 million accounts for “substantially all of the company’s assets.”
“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,” Kristina Littman, chief of the SEC Enforcement Division’s Cyber Unit, said in a statement.
Dissenting Commissioner Peirce noted that Unikrn wasn’t accused of committing any fraud, just a registration violation. Peirce said that not only did she not believe there was a violation, imposing a penalty that large will have a chilling effect on innovation on the part of other firms.
“The commission is effectively forcing the company to cease operations because of an allegedly improper offering of supposed securities,” Peirce said, who used the opportunity to try to gain support for her “safe harbor” proposal that would allow companies like Unikrn a three-year window to experiment and perfect their platforms without fear of running afoul of regulators in this new area of finance. In a statement shared with CoinDesk, Unikrn CEO Rahul Sood didn’t give any indication the demise of his firm is imminent. Sood said his firm “spent months working with the SEC to come to a solution that was about moving the business forward,” adding:
“The common ground we found requires Unikrn to completely stop supporting UKG and help provide a fund for purchasers of UnikoinGold. This gives us clearance to focus on continuing to build our industry-leading business.”
Unikrn’s statement in response to the SEC’s charges added the firm will continue to offer its services supported by major currencies, including fiat currencies, bitcoin (BTC), bitcoin cash (BCH), ether (ETH) and USDC, among others.
In a related matter, the SEC said Seattle-based Unikrn has settled charges brought by the Washington State Department of Financial Institutions for violating state regulations on such offerings. UPDATE: Adds SEC Commissioner Peirce’s dissent, comments. UTC 21:26