A dissatisfied investor has filed a class action lawsuit against Unikrn in Seattle, alleging violations of U.S. securities laws in connection with the 2017 UnikornGold (UKG) token sale. The complaint, filed on August 13, seeks the return of the plaintiff’s Ether contribution, arguing that the token offering constituted an unregistered securities sale under the Securities Act of 1933.
According to the lawsuit, Unikrn deliberately marketed UKG as a “utility token” in order to circumvent securities regulations. Between September and October 2017, the company reportedly raised 112,720 Ether—valued at approximately $31 million at the time—during its ICO. In addition, Unikrn secured a further $16 million from accredited investors via a Simple Agreement for Future Tokens (SAFT) structure in October 2017.
Parallels to Other ICO Cases
The complaint mirrors allegations seen in other high-profile ICO disputes, including Envion and Tezos. Among the similarities highlighted:
- Offshore Structure: The legal vehicle issuing the token was based in Bermuda, with plaintiffs arguing a lack of economic substance—an argument previously raised in the Envion and Tezos cases.
- Marketing & Social Media Communications: The lawsuit references statements made on Reddit, Telegram, and other social media channels during the token sale, suggesting the issuer was aware of investors’ speculative motivations.
- Token Retention & Ongoing Sales: The plaintiff alleges that tokens retained by project insiders—ostensibly to support ecosystem development—were sold, potentially contradicting earlier representations.
- Profit Expectation: Central to the claim is the argument that both the issuer and investors understood the economic reality: purchasers expected profits, satisfying key elements of the Howey Test used to determine whether an offering qualifies as a security.
- Pre-Sale Dynamics: As in Tezos, the role of early investors in promoting and supporting the main token sale is also scrutinized.
Legal and Market Implications
Unikrn is reportedly represented by Perkins Coie, a prominent U.S. law firm well known in the ICO space, particularly for its role in developing and promoting the SAFT framework.
At the time of writing, UKG trades at approximately $0.04—far below many investors’ expectations during the ICO boom. The plaintiff contends that the token sale was, in substance, an investment contract requiring proper securities registration and disclosure.
Given the widespread decline in token valuations since the 2017 ICO peak, this lawsuit could serve as a blueprint for similar claims. If courts increasingly view “utility token” offerings as unregistered securities sales, additional litigation may follow, potentially reshaping how digital asset projects structure token offerings in the future.