SEC Commissioner Hester Pierce Expresses Dissent on the Regulator’s Crackdown of Unikrn ICO

On Tuesday, September 15, the U.S. Securities and Exchange Commission (SEC) charged eSport gaming platform Unikrn for conducting an unregulated ICO of its native UnikoinGold (UKG) token back in 2017.

The SEC has ordered the company to pay all of its assets to investors, disable the token and further delist the UKG from all exchanges. Unikrn conducted its ICO between June and October 2017 raising $31.4 million to fund its crypto-based eSports betting platform.

The SEC order claimed that Unikrn had promised to add more features to the gaming platform and bringing more utilities to the UKG token thereby helping investors. The SEC said that as per the agency UnikornGold served more as a security and an investment contract, however, it failed to register and finds the company for violating the SEC laws.

The SEC order notes that Unikrn has agreed to settle all charges by paying $6.1 million penalty distributed to the investors through a “Fair Fund”. Besides, Unikrn has also agreed to suspend any trading and use of UKG token by September 25.

Kristina Littman, Chief of the SEC Enforcement Division's Cyber Unit said: “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, including the disabling of the tokens.”

Responding to the regulators decision, the pro-crypto commissioner Hester Pierce said: The Commission is effectively forcing the company to cease operations because of an allegedly improper offering of supposed securities”.

Along with the SEC, the Washington State Department of Financial Institution is looking into the matter and other settlement negotiations. Putting forward her proposition, Hester Pierce aka the crypto-mom said: Entrepreneurs may be forced to choose between unpalatable options: expending their limited capital on costly legal consultation and compliance or forgoing their pursuit of innovation due to fear of becoming subject to an enforcement action. A regulatory safe harbor could resolve this unhappy dilemma.”

She further proposed for a regulatory safe harbour serving the best interest of the SEC and the investors by letting developers experiment with a three-year regulatory window.

Although some may not see the loss of the benefits of innovation as large in this specific instance, posterity will feel the cumulative loss to society of innovation forgone because of such actions. Indeed, we will never know the full magnitude of such losses because some would-be entrepreneurs, having seen one too many Unikrns, may decide it wiser to shelve their most transformative ideas,” Peirce concluded.