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Mark Cuban-Backed Unikrn ICO Hit by Class Action Lawsuit

Unikrn, a Seattle-based e-sport betting startup that conducted an initial coin offering (ICO) last year, is now facing a class action suit that accuses it of violating securities law in the U.S.

John Hastings, a Las Vegas resident and the lead plaintiff, filed the case with a court in the Washington State on Aug. 13, and alleged Unikrn and its founder Rahul Sood sold unregistered securities to the public via the ICO for its blockchain-based UnikoinGold Tokens (UKG).

Hastings, himself a participant in the ICO, argued that the UKG token should be treated as a security since investors were made to expect that the tokens “would increase in value and become worth more than the virtual currencies invested.”

He further claimed that Unikrn has “crafted a flimsy façade that UKG Tokens are not securities by claiming they are ‘utility tokens.'” Sood said in a news report from Geekwire on Thursday that Unikrn is “aware of the lawsuit” but declined to give further comment on the case.

As previously reported by CoinDesk, Unikrn collected 112,720 ethers via its ICO from September to October in 2017, which was worth around $31 million at the time.

Based on a file submitted by Unikrn to the U.S. Securities and Exchange Commission (SEC) on Oct. 6, the firm also raised at least $16 million from accredited investors through investment contracts known as SAFT – Simple Agreement for Future Tokens.

Founded in 2014, Unikrn planned last year to launch its own token for a blockchain-based betting platform and subsequently conducted the ICO to raise funds for the project’s development.

The ICO was notably backed by “Shark Tank” VC Mark Cuban, who confirmed with CoinDesk his participation in the offering – a first for the owner of the Dallas Mavericks NBA franchise. “High risk. High reward,” he commented at the time.

Following the token sale, UKG was listed for trading on several crypto exchanges including the U.S.-based Bittrex.

The case was filed at a time when the price of UKG declined from its all-time-high around $2 early this year to $0.05 as of press time according to data from CoinMarketCap, reflecting an over 95 percent drop.

It is yet another class action lawsuit filed by investors against ICO projects they invested in.

Just last week, a court in California blocked a move that sought to dismiss a class action case alleging that the ICO conducted by the Tezos Foundation violated securities laws in the U.S.

Read the full complaint below:

Unikrn by CoinDesk on Scribd

Justice lady image via CoinDesk

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Best Investment? Mark Cuban Says Not Gold Or Bitcoin But Paying Off Debts

Billionaire tech businessman and one of the Shark Tank show’s “shark investors,” Mark Cuban has recently sat down with Kitco News, an outlet specialized on covering news about precious metals, to talk about his opinions on investing in various assets, including Bitcoin and gold.

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When asked about what is the safest investment right now, Cuban didn’t say stocks, gold or Bitcoin (BTC). Instead, he argued that paying off your credit cards, student loans, or  “whatever debt you have” is “probably the best investment” you can make.

“The reason for that is whatever interest you have – it might be a student loan with a 7% interest rate – if you pay off that loan, you’re making 7 percent. And so that’s your immediate return, which is a lot safer than trying to pick a stock, or trying to pick real estate or whatever it may be.”

Talking about gold and Bitcoin, Cuban said that he hates both, adding that he looks at cryptocurrencies and precious metals as largely the same thing, calling them “collectibles.” The billionaire investor explained that the value of both gold and Bitcoin is based on supply and demand. However, he also stressed that Bitcoin is in a more favorable position due to its scarcity.

“The good news about bitcoin is that there’s a finite supply that’ll ever be created, and the bad news about gold is that they’ll keep mining more.”

This is the second time when Cuban seemingly reversed his opinion on Bitcoin. Back in June 2017 he criticized the world’s leading virtual currency by calling it “a bubble,” but by October he started claiming that cryptocurrencies and Blockchain are the future.

Last October, Cuban also included a tip to invest up to 10% of your life savings in Bitcoin or Ethereum in his video “Guide to Getting Rich,” calling them “high-risk” assets. In his latest interview with Kitco, Cuban recommends to put the money in the bank to those who want to play it safe, “just to sleep well at night.”

Apart from investing in a digital currency hedge fund and an ICO, and launching the Ethereum-based cryptocurrency Mercury Protocol in 2017, Cuban also announced in January this year that the Dallas Mavericks NBA team, which he owns, will start accepting Bitcoin as payment next season.

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George Soros Warms Up To Crypto (BTC, ETH, XRP)

In an epic move, George Soros, the billionaire business magnate and investor, is now in the business of cryptocurrency investing. Soros was initially one of the prominent investors that were vehemently against Bitcoin (BTC) and crypto in general earlier this year.

Adam Fisher, who oversees macro investing at New York-based Soros Fund Management, says he got internal approval for the move to trade in digital assets a few months ago. Mr. Fisher is yet to declare the depth of the investment by the fund.

This is a complete 180 degree turn from what Soros said in January this year. He was quoted as saying:

“Cryptocurrency is a misnomer and is a typical bubble, which is always based on some kind of misunderstanding…Bitcoin is not a currency because a currency is supposed to be a stable store of value and the currency that can fluctuate 25% in a day can’t be used for instance to pay wages because wages drop by 25% in a day. It’s a speculation. Based on a misunderstanding.” 

From the point of view of many Crypto traders and enthusiasts, his statement were viewed as ‘blasphemous’. But you can at least try to put yourself in Soros’ shoes when he made these statements. Blockchain and crytpocurrencies came into the global limelight in a manner similar to a Tsunami. And being a traditional investors of stocks, bonds and shares, digital assets would look like ponzi schemes to Mr. Soros.

But for the generation that is under 35 who have grown up with the internet, video games and social media, cryptocurrencies seemed like any other good idea in their generation similar to the iPhone or Spotify. This is why we find teenagers being Bitcoin millionaires after buying the coin years ago using their $20 weekly allowances that they saved up under their pillows.

Soros joins a growing list of big investors who have seen the proverbial light of cryptocurrencies and their potential to change global economics. Another Bitcoin doubter turned believer, is the popular Shark Tank Investor and owner of the Dallas Mavericks, Mark Cuban. He too had declared Bitcoin as being a bubble only for him to recant his statements and further accept Bitcoin (BTC) as a form of payment for tickets to see the Dallas Mavericks play.

We can now safely bet that J.P Morgan’s Chairman and CEO, Jamie Damon, will also see the light and potential of cryptocurrencies after also calling Bitcoin a fraud earlier this year.

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NBA’s Dallas Mavericks Will Accept Bitcoin For Tickets, Mark Cuban Promises

Mark Cuban, billionaire tech investor and owner of the NBA team The Dallas Mavericks tweeted on Tuesday, Jan. 16 that starting next season, it will be possible to buy tickets to the team’s games with Bitcoin.

The Dallas Mavericks won’t be the first basketball team to start accepting Bitcoin as payment for tickets. The Sacramento Kings officially started accepting Bitcoin for promotional products as well as for tickets as far back as 2014.

Cuban is a prominent figure in the cryptocurrency industry. He is famous for not only investing in a digital currency hedge fund and an ICO but also launching the Ethereum-based cryptocurrency Mercury Protocol in August 2017.

Cuban’s view on cryptocurrency and Blockchain has changed multiple times over the course of 2017 — he joined the voices calling the world’s leading virtual currency “a bubble” in June, but by October was claiming cryptocurrencies and Blockchain are the future.

In addition, Cuban included a tip to invest 10% of your life savings in Bitcoin in his video guide on ‘how to get rich’.

“If you’re a true adventurer and you really want to throw the Hail Mary, you might take 10 percent and put it in Bitcoin or Ethereum,” Cuban noted in the video.

While the cryptocurrency market is undergoing a difficult period, the fact that billionaire investors like Cuban, Thiel and Zuckerberg recognize the prospects of Bitcoin is a sign of potential future growth.

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Mark Cuban: Dallas Mavericks to Accept Bitcoin, Ether 'Next Season'

The Dallas Mavericks, the U.S. basketball team, will begin accepting cryptocurrency payments during their next season, according to owner and investor Mark Cuban.

Cuban was asked about the possibility of paying for tickets with cryptocurrency on Twitter earlier today, to which he replied: “Next season.”

In a follow-up comment to CoinDesk, Cuban confirmed the news and said that the team would take both bitcoin and ethers – as well as “possibly some other currencies.”

He explained:

“We will be adding a crypto payment ability for next season. We will accept BTC, Eth, possibly some other currencies. [That’s] to be determined.”

Cuban is a backer of industry firms such as crypto-asset investment fund 1confirmation, and Unikrn, an e-sports company within the “Shark Tank” VC’s portfolio, recently held an initial coin offering that ultimately raised $31 million.

Though he didn’t offer any specifics, Cuban suggested that the Mavericks’ crypto-payments system could, when launched, offer support for other tokens as well beyond the more well-known cryptocurrencies like bitcoin and ether.

“We will also look at accepting tokens from companies we have traditional business relationships with as a way to expand our customer base,” he told CoinDesk.

Michael del Castillo contributed reporting.

Image Credit: dean bertoncelj / Shutterstock.com

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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David Stockman Says Cryptocurrency Investors Are “Stupid Speculators”

President Ronald Reagan’s Former Director of the Office of Management David Stockman has told CNBC’s Futures Now in an interview that investors in the cryptocurrency market are “stupid speculators” and will suffer a “spectacular crash.”

Stockman stated:

“It’s basically a class of really stupid speculators who have convinced themselves that trees grow to the sky. It will burn out in a spectacular crash. All of these latter-day speculators will have their hands burned to a crisp, and they will learn the proper lesson.”

Weak argument

Over the past few months, Stockman has also expressed his bearish stance on the global stock market and predicted a “gigantic, horrendous storm” to hit stocks. Essentially, Stockman has predicted literally every asset and cryptocurrency in the global market to fall in value in an indefinite period, making his prediction and argument significantly weak.

Economists like Stockman and Paul Krugman have continuously failed to provide compelling arguments as to why investment in the cryptocurrency market and crypto assets such as Bitcoin and Ethereum are “stupid.” Stockman and Krugman have stated that Bitcoin is a bubble and that cryptocurrencies do not have underlying value or intrinsic value.

However, as Billionaire Investor Mark Cuban explained, the lack of intrinsic value is true for any asset and currency in the market. Even fiat currencies that are fully controlled by governments in terms of supply and circulation also do not have intrinsic value, as their valuation depends on the market and the demand from investors. If businesses, individuals and investors decide not to utilize the US dollar, its value will also inevitably fall.

At the Vanity Fair New Establishment Summit 2017, Cuban noted:

“It is interesting because there are a lot of assets which their value is just based on supply and demand. Most stocks, there is no intrinsic value because you have no true ownership rights and no voting rights. You just have the ability to buy and sell those stocks. Bitcoin is the same thing. Its value is based on supply demand. I have bought some through an ETN based on a Swedish exchange.”

It is relatively easy to condemn an asset class or a particular stock with basic arguments like the lack of intrinsic value and speculation in the market. But, it is difficult to provide specific reasons as to why assets are overvalued and are caught up in short-term bubbles.

Moreover, it is not possible to generalize investors in the cryptocurrency market as speculators. Many investors in the cryptocurrency market could understand the technology behind decentralized currencies like Bitcoin and their potential to challenge multi-trillion markets like the offshore banking and gold markets, which is sufficient to justify their investment in the sector.

Cryptocurrencies are not bubbles

While it is possible for Bitcoin and cryptocurrencies to experience short-term bubbles, cryptocurrencies in general are not bubbles. The cryptocurrency market is one of the liquid markets in the world and Bitcoin, the most valuable cryptocurrency in the market, is already more liquid than the most liquid stock on earth in Apple, with a $12 bln daily trading volume.

Cryptocurrencies also experience major corrections several times a month, and their values fall by nearly 30 percent on a regular basis, before recovering. Corrections prevent short-term bubbles from forming, as speculators drop off and the market solidifies.

Stockman also claimed that cryptocurrencies are not real money because transactions are not stable. Transactions on leading public Blockchains like Bitcoin, Ethereum and Litecoin are processed on a stable network with a well-structured fee system and consensus protocol algorithm.

“I have no idea. I mean it could double or triple from here or it could fall to zero. But the point is that it’s not real money because real money for transactions has to be stable,” Stockman added.

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India Falsely Condemns Bitcoin as Ponzi Scheme, Flawed Logic

Recently the Indian finance ministry criticized Bitcoin and the rest of the digital currencies in the market for their lack of intrinsic value.

The Indian finance ministry stated:

“There is a real and heightened risk of investment bubble of the type seen in Ponzi schemes which can result in sudden and prolonged crash exposing investors, especially retail consumers losing their hard-earned money. Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes.”

Flawed logic

Billionaire investor Mark Cuban, a former Bitcoin critic turned holder, previously emphasized that the concept of intrinsic value simply does not exist. Even fiat currencies such as the US dollar and Indian rupee do not have intrinsic value, given that their valuations are decided by two major factors: the market’s demand and the manipulation of supply by central authorities. Cuban said:

“It is interesting because there are a lot of assets which their value is just based on supply and demand. Most stocks, there is no intrinsic value because you have no true ownership rights and no voting rights. You just have the ability to buy and sell those stocks. Bitcoin is the same thing. Its value is based on supply demand. I have bought some through an ETN based on a Swedish exchange.”

Hence, the Indian finance ministry’s argument in that Bitcoin and other cryptocurrencies are Ponzi scheme-like because they do not have assets backing their value is flawed, as the same argument can be applied to fiat currencies.

More importantly, analysts have questioned such irrational statement from the Indian finance ministry considering that the country has just recovered from a disastrous financial turmoil triggered by the country’s Prime Minister Narendra Modi controversial decision to crackdown on criminals by eliminating 500 and 1,000 banknotes.

Sunny Ray, the co-founder and president of Unocoin, India’s second largest Bitcoin exchange, wrote:

A sudden and unforeseen crackdown on the national currency led to months-long confusion and financial instability, leading to a period in which fatalities were recorded as people died out of exhaustion waiting in lines to withdraw cash. Because the supply of banknotes was cut so significantly in a short period of time, at one point, more than 90 percent of the country’s ATMs did not have any cash to dispense.

In November 2016, LA Times reported that the unprecedented ban on large bills and banknote denominations backfired on the poor, and the vast majority of the population struggled to obtain enough cash to finance day-to-day operations. Ramesh Sisodia, a local merchant, told LA Times:

“People don’t have money to buy bread — why would they stroll out for a coffee? Those who can afford it would prefer to pay 10 times more for a coffee at Barista — a Starbucks-like chain — because they can pay by card.”

Highly regarded Indian Entrepreneur Gaurav Munjal also revealed that a large portion of the population had relied on the barter system to exchange goods because cash was no longer available for the poor and middle class.

The Indian government was condemned for its statement on Bitcoin and the cryptocurrency market because it has irrationally attacked a decentralized currency system and stores of value that are providing financial stability and independence to their users, unlike the government-owned and issued fiat money.

It also falsely claimed that the price of Bitcoin and other cryptocurrencies are based on pure speculation, failing to acknowledge the fact that crypto assets of the Bitcoin network, Ripple, Ethereum, and others are being used to send and receive transactions, store wealth, process large payments, run decentralized applications and settle private transactions.

“The price of Bitcoin and other virtual currencies, therefore, is entirely a matter of mere speculation resulting in spurt and volatility in their prices,” the finance ministry added.

Why is Indian government harsh on Bitcoin?

As a decentralized and distributed currency system which exists on a peer-to-peer protocol, Bitcoin eliminates the necessity of intermediaries and third-party service providers like the Indian central bank. It could render the existence of central authorities and their control over the country’s monetary system useless.

But, over the upcoming years, it would become more difficult for certain governments to remain indifferent or negative toward the cryptocurrency market because major markets like the US, Japan, and South Korea have already embraced Bitcoin as a legitimate currency and asset class.

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ESports Becoming Blockchain-Only Following Mark Cuban’s Backing of ICO?

The eSports industry is getting a massive Blockchain technology makeover from some pretty famous corners these days. The recent news that Ethereum co-founder Mark Cuban’s eSports betting platform Unikrn raised over $31 mln broke over Twitter:

Such a substantial support for the token sale is a sign that Blockchain is making big inroads into both technology and betting sectors for eSports.

Betting platforms

The eSports betting platform Unikrn is allowing users to participate in the eSports industry in new ways. For example, users are able to earn tokens simply by playing games, and the platform is giving away skins and prizes for active participants.

However, the backbone of the platform is a focus on betting. Users are able to bet on matches using platform tokens, or real funds in certain countries.

Other platforms have also made inroads into the eSports betting world as well. For example, Eloplay is an already functioning platform that is now using Blockchain technology to allow players to challenge each other for prize pools using smart contracts. The platform creates a system that allows gamers and companies the chance to create pools and offer prizes in a secure way through smart contracts.

While betting on eSports has been occurring since the industry’s earliest days, the power of Blockchain technology is reshaping how these events are scheduled. Cuban, at least, sees the value in such platforms.

Technology upgrade

Not only is the betting aspect of eSports getting a Blockchain upgrade, but the gaming platforms themselves are receiving a boost. For example, GameProtocol is creating a new decentralized platform that allows gamers to connect with each other, developers to use Blockchain tools and even a decentralized app store for everyone. According to the GameProtocol CEO, Jonathan Swerdlow:

“Blockchain is one of the most advanced and secure technologies ever built by mankind, the gaming industry will quickly shift to this upcoming decentralized internet 3.0. The internet changed gaming forever but Blockchain will take it even further. GameProtocol is positioning itself to become the leader in this space.”

Because Blockchain technology removes the centralized hub of these systems and provides a functioning intermediary through technology, players and developers are able to communicate directly and interactions are smoother and simpler. 

Further, the decentralization process will also allow for pooling of bandwidth in order to increase efficiency and speed of play. Computing systems like those being developed by Network Units will create the ability for gamers to tap into and utilize huge pools of bandwidth that are otherwise cost prohibitive. According to Forbes:

Network Units is an online gaming platform with a built-in player reputation management. It provides decentralized and scalable computing resources to augment developers’ infrastructure and mechanisms to mitigate cheating, downtime, and costly maintenance that developers often face when using traditional means.”

This bandwidth pooling feature of Blockchain technology is already being used effectively to put a stop to DDoS attacks and others. However, the power to then utilize that bandwidth for eSports applications will revamp the way online gaming occurs.

Cuban the frontrunner

If the power of Blockchain can revitalize the eSports world, it may be that Mark Cuban is a frontrunner in the space, just as he was with Ethereum. As gaming, betting, and technological solutions for eSports come online, the industry will inevitably experience a change in leadership, from centralized corporations to decentralized platforms.

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Mark Cuban-Backed Unikrn Raises $31 Million in E-Sports Token Sale

E-sports betting startup Unikrn has raised roughly $31 million in an initial coin offering.

The firm collected 112,720 ethers – an amount worth approximately $31.4 million at press time – in a token sale that took place in two phases, including 56,000 ETH (roughly $15.6 million) in a presale backed by celebrity investor Mark Cuban. In an email, Rahul Sood, chief executive of Unikrn, said that the company had sourced contributions from 112 countries, characterizing them as “mostly small purchasers.”

The ICO’s completion also follows Unikrn’s receipt of a gambling license in Malta, a significant boon for a company looking to apply the tech to the electronic sports betting space.

The idea is that Unikoin Gold, the token that was up for sale, will act as a common medium of exchange for bettors to use on the platform, which allows for placing wages on games like League of Legends, Defense Against the Ancients (Dota) and CounterStrike, among others.

Unikoin Gold is actually replacing a previous in-house virtual currency, dubbed Unikoins, that was used in conjunction with government-issued currencies on the site. The startup was founded in 2014 with backing from investors like Elisabeth Murdoch and Ashton Kutcher.

According to Sood, the coming months will see the release of additional applications to build on the Unikoin framework, including tools that allow users to garner more tokens.

“We have plenty of applications that allow users to use and earn tokens — we will start to release them in November through February,” he said.

Image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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Put 10% Savings in Bitcoin, Mark Cuban Tells Vanity Fair ‘Adventurers’

Investor and entrepreneur Mark Cuban has upped his cryptocurrency advocacy, telling Vanity Fair readers to put 10 percent of their money into it.

In a video guide on “getting rich,” Cuban produced nine tips on maximizing potential wealth long-term.

Among them in fifth place was advice to “invest up to 10 percent of savings” in so-called “high risk” assets, specifically Bitcoin and Ethereum.

“If you’re a true adventurer and you really want to throw the Hail Mary, you might take 10 percent and put it in Bitcoin or Ethereum,” he said.

“But if you do that, you’ve got to pretend you’ve already lost your money.”

Cuban’s own perspective on Bitcoin has undergone a metamorphosis this year. Despite considering its price as a bubble, the billionaire subsequently invested in both an ICO and a dedicated cryptocurrency hedge fund.

While some skepticism remains, Cuban’s 10 percent figure is still higher than that advised by fellow investor Fred Wilson, who last week suggested a maximum of three to five percent crypto holdings for the “average” investor.

“I think that’s likely at the high end of what the average person should have, but I also think it’s not a ridiculous number for the average person to have,” he said discussing the topic.

“Many endowments, pension funds, etc allocate three to five percent of their portfolio to venture capital. They know (it’s) a risky asset but it has the potential for outsized returns.”