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Unikrn was one of the Seattle 10 companies in 2015, recognizing its status as one of the region’s most promising startups. (GeekWire Photo / Kevin Lisota) Unikrn , the Seattle-area esports betting startup, is being sued on allegations that the company skirted federal regulations during its initial coin offering last year. ICOs are an increasingly popular and controversial way for companies typically in the blockchain and cryptocurrency arenas to raise money. Anyone — not just accredited investors — can buy tokens to be redeemed for items on the company’s platform or converted to more mainstream cryptocurrencies like Bitcoin and Ethereum. The plaintiff in this case, Las Vegas resident John Hastings, put 10 Ethereum into Unikrn’s ICO last September, which would have been worth about $2,800 that day, according to CoinMarketCap . This week, Hastings filed a lawsuit in King County Superior Court seeking class action status against Unikrn; a Bermuda subsidiary of the company; CEO Rahul Sood, a former general manager of Microsoft’s investment arm; and Chief Marketing Officer Karl Flores. Sood said Unikrn is aware of the lawsuit and has retained Seattle firm Perkins Coie to “vigorously defend” the company. Sood and Jean-Jacques Cabou, a partner at Perkins Coie, declined to comment on the specifics of the case. Sood said the company will keep its head down “building the most amazing blockchain-powered esports experiences on Earth. We are focused on that, even in the face of meritless litigation like this.” In the lawsuit, Hastings alleges that Unikrn attempted to avoid federal securities laws by claiming its currency represented a “utility token” — essentially a digital coupon that could be exchanged for services and items on the company’s platform — rather than an investment intended to bring profit for buyers. “Defendants have crafted a flimsy façade that UKG Tokens are not securities by claiming they are utility tokens,” according to the suit.
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