Mark Cuban-Backed Crypto Firm Pays SEC $6M Fine for $31M ICO
updated on:16 Sep 2020
The SEC announced today that Unikrn agreed to pay a $6.1 million penalty to the SEC, “substantially all of the company’s assets.” The SEC will then return the money to investors.
Unikrn tweeted that it is retiring its other tokens: Unikrn Loot, Unikrn Connekt, UnikoinSilver & UnikoinGold. People don’t really use UnikoinGold anymore. The coin, which peaked at about $2 in 2017, is today worth one cent. It has a market cap of $1.6 million and trades about $4,000 a day, according to metrics site CoinMarketCap.
The SEC generally alleges that the blockchain-based token sold in the ICO constitutes a security, or more specifically, an investment contract. To prove this, it argues that the ICO fulfils the conditions laid out in the Howey Test, a decades-old yardstick for settling such trifles.
Then the crypto startup will usually respond by saying that the ICO isn’t a speculative investment, but rather an opportunity to get early access to a token that its holders can use on its platform.
The SEC is generally unconvinced. Here, it claims that “Unikrn promised investors that it would facilitate a secondary trading market for the tokens and that its efforts to increase the usages for the UKG token would increase demand for and in turn, the value of, the tokens.”
The Commission continued: “The order finds that Unikrn offered and sold UKG as investment contracts, which constituted securities, yet failed to register the offering or qualify for an exemption.”
Unikrn, like all of the other firms that lost this battle, settled “without admitting or denying the SEC's findings.”
Kristina Littman, chief of the SEC Enforcement Division's Cyber Unit, said in a statement: "The securities registration and exemption framework is designed to ensure investor protection and access to material information, while also facilitating capital formation.”
And it’s on to the next one for the SEC.
Editor's note: This article and its headline were updated after publication to provide additional details about Unikrn's settlement with the SEC.
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