SEC Shuts Down Unikrn For Its $31M 2017 ICO

[Yaunfitda]

SEC Shuts Down Unikrn For Its $31M 2017 ICO

Key Takeaways

The Securities Exchange Commission is effectively shutting down Unikrn for its $31.4 million ICO conducted in 2017.

Pro-cryptocurrency Commissioner Hester Peirce objected to the enforcement action, saying that it may set a precedent that would stifle future innovation.

Unikrn will serve as an example to other ICOs that the SEC is serious about securities registration requirements and will continue to ramp up enforcement.

https://cryptobriefing.com/sec-shuts-down-unikrn-31m-2017-ico-commissioner-hester-peirce-dissents/

So another one bites the dust, it looks like SEC is ramping up it's activity regarding shutting down known ICO's in 2017, during the hype, and sending messages that they need every projects needs to comply with them otherwise a legal case, worst their project are going to be pulled out.

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[jackg]

Wasn't a 3 year window passed for the US where a company knew that after the ico they had that time to innovate? If they haven't, its probably good they've been forced to close..

[Yaunfitda]

Wasn't a 3 year window passed for the US where a company knew that after the ico they had that time to innovate? If they haven't, its probably good they've been forced to close..

I'm not really sure if there such thing as "statue of limitation". But as far as I remember, there was a lot of hype about this project, even billionaire Mark Cuban and Ashton Kucher was into this project,

This is a 2017 article from coindesk:

The firm collected 112,720 ethers – an amount worth approximately $31.4 million at press time – in a token sale that took place in two phases, including 56,000 ETH (roughly $15.6 million) in a presale backed by celebrity investor Mark Cuban. In an email, Rahul Sood, chief executive of Unikrn, said that the company had sourced contributions from 112 countries, characterizing them as “mostly small purchasers.”

https://www.coindesk.com/mark-cuban-backed-unikrn-raises-31-million-e-sports-token-sale

[HeRetiK]

Good. Companies should be treated as such. Using a blockchain rather then traditional means does not give you a free pass.

Also if a single government agency is able to shut you down you might be using decentralization wrong.

[Yaunfitda]

Good. Companies should be treated as such. Using a blockchain rather then traditional means does not give you a free pass.

Also if a single government agency is able to shut you down you might be using decentralization wrong.

Well it's the US that we are talking about here and not just a single government agency and so everyone should not really get a free pass from them. Maybe they really thought that they can get away with it since it was the hay day of ICO's, but SEC is really stepping up and I'm sure this is not the last. And those ICO's think they are safe today, think again. SEC is just heating up the game.

[hugeblack]

It seems that the court ruling that was taken in this incident is similar to what actually happened in the Telegram case, so it is easy for the court to rely on the same facts, which is the company's failure to fulfill the obligations for which it obtained financing.

Presumably, the SEC relied on its theory⁠—developed in its recent case against Telegram⁠—that SAFT investors are statutory underwriters. Therefore SAFTs are not entitled to the exemption from registration in Rule 506(c).

https://cryptobriefing.com/sec-shuts-down-unikrn-31m-2017-ico-commissioner-hester-peirce-dissents/

Pro-cryptocurrency Commissioner Hester Peirce objected to the enforcement action, saying that it may set a precedent that would stifle future innovation.

I do not know what the relationship between it and the stifle of innovation, that they have made a funding round and obtained an amount of money without doing their part in the deal.

[Jating]

Pro-cryptocurrency Commissioner Hester Peirce objected to the enforcement action, saying that it may set a precedent that would stifle future innovation.

I do not know what the relationship between it and the stifle of innovation, that they have made a funding round and obtained an amount of money without doing their part in the deal.

I think we should understand where Hester Peirce is coming from, after all, she is a pro-crypto. And being a pro-crypto obviously she will have to challenge and question the decision. However, I believed that this is the correct enforcement. The project failed to deliver its promised and duped their investors.

Again, SEC is applying the law here, and we all know that these kind of scams are very rampant during that time and many of them simply exit scams without being meted any penalties resulting to lost just not the money itself, but in the confidence of crypto market.

[Harlot]

I think Telegram's GRAM coin already set precedent when it comes to how strict the SEC is on when it comes to defining what type of cryptocurrency are you offering. Telegram actually raised 1.7 billion USD with their pre-sale. They failed to make a registration for their selling and they failed to justify their token being a utility not a security. I'm guessing that Unikrn also faced the same issue with the SEC when it comes to classifying their cryptocurrency as well. For project teams planning to launch an ICO sale in the US I think the best approach for their crypto is to consult lawyers as well the SEC when it comes to classifying their token, because things can be messy when you just plan to offer out your project instantly.

[btc_angela]

I think Telegram's GRAM coin already set precedent when it comes to how strict the SEC is on when it comes to defining what type of cryptocurrency are you offering. Telegram actually raised 1.7 billion USD with their pre-sale. They failed to make a registration for their selling and they failed to justify their token being a utility not a security.

Right, it already had a precedent, so there's nothing to question about their decision to shutdown another ICO that didn't register it correctly, under the SEC rules. Some of this projects think that they can circumvent the law, although it took time for SEC to file the case and the eventual shutdown, still Unikrn has to settle with a $6.1 million penalty.

I'm guessing that Unikrn also faced the same issue with the SEC when it comes to classifying their cryptocurrency as well. For project teams planning to launch an ICO sale in the US I think the best approach for their crypto is to consult lawyers as well the SEC when it comes to classifying their token, because things can be messy when you just plan to offer out your project instantly.

Just to be fair with Unikrn, their project was launch in 2017, wherein I would say their is a lax on SEC's part that's why they were able to launch it without any issues. But now it's different, probably 'crypto' lawyers are there every step to help them not have this kind of issues in the future.

[sheenshane]

As I see here, even if we turn it upside down, cryptocurrency in 2017 was still a very vulnerable market. SEC just played their part and is trying to avoid people losing their hardly earned their money.

The main reason why SEC is against the cryptocurrency is that ICOs are so easy to manipulate when you're there. And they can also scam people anytime they wanted. And I guess they did the right thing before.  I'm very much passionate about the crypto-industry. And I know there is a lot
of opportunity, this industry will develop slowly.

[jossiel]

Nice.

They are going with those companies that haven't registered yet conducted an ICO. This is the article and statement coming from SEC.

https://www.sec.gov/news/press-release/2020-211

[Kemarit]

As I see here, even if we turn it upside down, cryptocurrency in 2017 was still a very vulnerable market. SEC just played their part and is trying to avoid people losing their hardly earned their money.

It's really hard to stop when we are in a bull-run in 2017 and I'm sure it will play out the same. The market is very young back then, and I'm guessing that they will be lots of noobs who are going to enter regardless if there is SEC or not.

The main reason why SEC is against the cryptocurrency is that ICOs are so easy to manipulate when you're there. And they can also scam people anytime they wanted. And I guess they did the right thing before.  I'm very much passionate about the crypto-industry. And I know there is a lot
of opportunity, this industry will develop slowly.

That's one thing, another is that it is uncontrollable market, anyone can create his token or project, conduct and ICO advertise in this community and then pull out a exit scam. And that is what SEC is trying to prevent at the very onset. In this case though, Unikrn was caught misdeclaring their project and hide it, but it is a securities according to SEC law and that's why they have to follow or else it will be shutdown which eventually happen here.

[Harlot]

I think Telegram's GRAM coin already set precedent when it comes to how strict the SEC is on when it comes to defining what type of cryptocurrency are you offering. Telegram actually raised 1.7 billion USD with their pre-sale. They failed to make a registration for their selling and they failed to justify their token being a utility not a security.

Right, it already had a precedent, so there's nothing to question about their decision to shutdown another ICO that didn't register it correctly, under the SEC rules. Some of this projects think that they can circumvent the law, although it took time for SEC to file the case and the eventual shutdown, still Unikrn has to settle with a $6.1 million penalty.

I'm guessing that Unikrn also faced the same issue with the SEC when it comes to classifying their cryptocurrency as well. For project teams planning to launch an ICO sale in the US I think the best approach for their crypto is to consult lawyers as well the SEC when it comes to classifying their token, because things can be messy when you just plan to offer out your project instantly.

Just to be fair with Unikrn, their project was launch in 2017, wherein I would say their is a lax on SEC's part that's why they were able to launch it without any issues. But now it's different, probably 'crypto' lawyers are there every step to help them not have this kind of issues in the future.

I don't know the timing of when SEC has filed a case against Unikrn but it would really be irrelevant on this matter. What I mean about that is even if the US SEC has spotted their faults 2 or 3 years after the said sale they still violated something even if SEC was able to catch up late. Them being under the radar for 2 or 3 years doesn't necessarily mean that they have a free pass on not being able to register their security token. I know the punishment is hard that they won't be able to push through with their project and we are hoping for a much lighter sentence but I don't think we will be getting that soon so the most likely solution here is to just like I said have consultations first before moving forward with your project.

[stompix]

I think we should understand where Hester Peirce is coming from, after all, she is a pro-crypto. And being a pro-crypto obviously she will have to challenge and question the decision. However, I believed that this is the correct enforcement. The project failed to deliver its promised and duped their investors.

This is one of the things I don't like about her, she is ready to give the green light to every project just because it has the word crypto somewhere in the whitepaper, rather than a crypto mom she should be called token nanny. She really needs to put the brakes on her enthusiasm and realize not every crypto project will be a success, and with that people are losing money, the same people that's her job to protect.

But, rather than focusing on how you can burn 30mils and be left with barely 6 million in two years and deliver nothings, I'm wondering who did they manage to get that far in the first place, I mean, it's a betting platform with a betting token, and the US has a lot of issues with betting rules. especially with the online stuff.

I'm not really sure if there such thing as "statue of limitation". But as far as I remember, there was a lot of hype about this project, even billionaire Mark Cuban and Ashton Kucher was into this project,

I think it's about time for some laws so that people "backing" or rather outright shilling projects that turn bad to strat paying for real when the whole house of cards collapses, not just fill their pockets and then go silent.

[squatter]

Wasn't a 3 year window passed for the US where a company knew that after the ico they had that time to innovate? If they haven't, its probably good they've been forced to close..

Hester Peirce proposed a 3-year safe harbor provision, but I don't believe it was ever implemented.

This is one of the things I don't like about her, she is ready to give the green light to every project just because it has the word crypto somewhere in the whitepaper, rather than a crypto mom she should be called token nanny. She really needs to put the brakes on her enthusiasm and realize not every crypto project will be a success, and with that people are losing money, the same people that's her job to protect.

Investing in startups is quite risky as it is. The SEC regulates the pink sheet stock market too, which is notorious for startup failures and rampant micro-cap stock fraud. If it doesn't meet the qualifications to be listed on a registered national exchange, the SEC just doesn't pay all that much attention. In a sense, one could say she wants to see token markets treated equally to the rest of the stock market, instead of seeing it specifically cracked down on.

[DaveF]

I *think* we are going to be seeing more and more of this.
Not because the SEC cares, but because some people who are famous / have money and should have known better have been caught up in many ICOs over the years.
So now the SEC has to go out and show they are doing their job.

In terms of regulation it's still the wild west out there and it's going to take a while to really come up with a framework that is logical and implement it.
Remember this is the government, everything moves at the speed of slow.....

-Dave

[STT]

I dont see Unikrn did anything wrong especially, I certainly as a long term user of the site can see they were great to actual players in games they supported.    Sure they are wanting to profit from activities, encourage betting and so on and not every jurisdiction will allow this freely but they were certainly honest and straight forward every time I dealt with them.    Everything was fine with them till a year or so back when they went nuclear with the KYC and restricted access because I guess this fear of government regulators, its not a failure of crypto thats for sure but of the general ability of companies to freely operate.
   All I see from this is it hands the advantage to foreign companies over those more closely related to those countries enveloped in red tape.    No capital was ever requirement in my involvement with Unikrn, time sure but whatever happened to cavet emptor I fail to see the purpose to ending them tbh.

[Saisher]

The main reason why SEC is against the cryptocurrency is that ICOs are so easy to manipulate when you're there. And they can also scam people anytime they wanted. And I guess they did the right thing before.  I'm very much passionate about the crypto-industry. And I know there is a lot
of opportunity, this industry will develop slowly.

The big part of development is education on what Cryptocurrency really is and what it can contribute to the present generation, unfortunately there are so many people coming in looking on how to make money here and getting rich, ignoring the basic facts and the ultimate goal of Cryptocurrency and blockchain.

Because of this so many developers are launching ICO because this is the market wants and they are giving it to them.