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On September 15, the U.S. Securities Exchange Commission (SEC) charged Seattle-based eSports gaming firm, Unikrn, for conducting an unregulated ICO between June and October 2017. The statement from SEC claims Unikrn made an ICO raise of $31 million from selling its native UnikoinGold (UKG) token, promising to add more features to the gaming platform and providing more utilities to the UKG token.

However, three years ago, the authorities find the sale of UKG as a violation of registration laws. SEC finds Unikrn guilty of not registering the token through it as UKG represents an investment contract. The statement reads,

“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.”

According to Kristina Littman, Chief of the SEC Enforcement Division's Cyber Unit, failure to follow the registration laws impedes the market rules hence “harming investors and [the] markets.”

Unikrn has since accepted to pay the $6.1 million penalty imposed by the SEC – a substantial amount of all company funds – without admitting or denying any wrongdoings. The fine will then be distributed to all UKG investors through a Fair Fund. Unikn also agreed to disable any buying, selling, and use of the UKG token by Sept. 25th. Littman said,

“This resolution allows us to return all of Unikrn's assets substantially to already-harmed investors and includes measures to prevent future sales to retail investors, including the disabling of the tokens.”

Speaking to Coindesk, Rahul Sood, CEO of Unikrn, said they had been working with the SEC to find a resolution on moving the business forward. He further stated the discontinuation of UKG services would help the company focus on building better products in the future. He said,

“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.”

SEC Commissioner and crypto enthusiast, Hester Peirce, also known in the crypto space as Crypto Mom, filed a statement for dissent on the charges SEC found in Unikrn. Pierce states the company did not commit any fraud during its ICO – only a registration offense was committed. Despite condemning registration offenses, Crypto Mom claims such enforcement actions could lead to stifling of innovation in the crypto arena.

“Registration violations, even standing alone, are serious, and our enforcement actions can serve to deter such violations and protect harmed investors,” she said.

“We should strive to avoid enforcement actions and sanctions, however, that enervate innovation and stifle the economic growth that innovation brings. I believe that this action and its accompanying sanctions will have such consequences.”

Furthermore, she disagrees that UKG token sale constituted as a security because the SEC has not placed clear guidelines for entrepreneurs and businesses to follow in token sales. The securities regulator is lagging behind in implementing laws that set a dilemma for several innovators – choosing whether to drop the project or continue developing with a dark cloud of enforcement hanging over their heads.

Pierce suggested the implementation of a regulatory safe harbor that allows the SEC to implement and regulate projects on antifraud laws while providing a safe space for innovation to continue. “A regulatory safe harbor could resolve this unhappy dilemma,” she states.

“Affording a company like Unikrn a three-year regulatory window within which to further develop and refine its platform—while still subjecting it to the antifraud laws—would provide benefits to token purchasers, token issuers, and the Commission.”

She ended her statement calling for better regulation policies and experimentation of new approaches to prevent stifling of innovation within the U.S.

The post SEC Charges eSports Platform, Unikrn, A .1M Penalty For An Unregistered ICO; Hester Peirce Dissents first appeared on BitcoinExchangeGuide.

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