# UNITED STATES OF AMERICA

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URL: https://www.frixlaw.com/law-library/documents/agency%3Asec%3A4cc26ea1d62eee6b

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

ADMINISTRATIVE PROCEEDING
File No. 3-20003

In the Matter of
Unikrn, Inc.
Respondent.

I.

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AMENDED PROPOSED PLAN OF
DISTRIBUTION

OVERVIEW

1.
The Division of Enforcement submits this Amended Proposed Plan of
Distribution (the “Plan”) to the United States Securities and Exchange Commission (the
“Commission”) pursuant to Rule 1101 of the Commission’s Rules on Fair Fund and
Disgorgement Plans (the “Commission’s Rules”), 17 C.F.R. § 201.1101. This Plan provides for
the distribution of a Fair Fund (the “Fair Fund”) comprised of civil money penalties paid by
Unikrn, Inc. (“Unikrn” or the “Respondent”) in the above-captioned matter.1
2.
As described more specifically below, the Plan seeks to compensate investors
who were harmed by the Respondent’s conduct described in the Order, in connection with their
purchase of Unikoin Gold (“UKG”), a digital token, directly from Unikrn, Inc. Based on
information obtained by the Commission staff during and after its investigation and the review
and analysis of applicable records, the Commission staff and the Fund Administrator have
reasonably concluded that they have sufficient records necessary to calculate each investor’s
harm. As a result, the Fair Fund is not being distributed according to a claims-made process, so
procedures for making and approving claims in accordance with Rule 1101(b)(4) of the
Commission’s Rules, 17 C.F.R. § 201.1101(b)(4), are not applicable.
3.
As calculated using the methodology detailed in the Plan of Allocation (attached
as Exhibit A), investors will be compensated for their losses in UKG that were purchased or
acquired directly from Unikrn, Inc. in either the pre-sale or ICO phase of the securities offering
(“Offering”) between June 11 and November 7, 2017 (the “Relevant Period”).

1

See Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making
Findings, and Imposing Penalties and a Cease-and-Desist Order, Securities Act Rel. No. 10841 (Sept. 15, 2020) (the
“Order”).

4.
In the view of the Commission staff, this methodology constitutes a fair and
reasonable allocation of the Fair Fund.
5.
The Commission has custody of the Fair Fund and shall retain control of the
assets of the Fair Fund. The Plan is subject to approval by the Commission, and the
Commission retains jurisdiction over its implementation.
II.

BACKGROUND

6.
On September 15, 2020, the Commission issued the Order instituting and
simultaneously settling cease-and-desist proceedings against the Respondent. In the Order, the
Commission found that between June and October 2017, Unikrn, an operator of an online eSports gaming and gambling platform, conducted an Offering in two phases - a so-called pre-sale
and an initial coin offering (“ICO”) - in which it raised $31 million through the sale of UKG, a
digital token. Unikrn represented to investors that they would be able to access a variety of
products and services with their UKG tokens, including placing bets on professional eSports and
video game matches, and that over time Unikrn would make more features available. Unikrn
further represented that it would facilitate a secondary trading market for the tokens and that its
efforts to increase the usages for the UKG token would increase the demand for and in turn, the
value of the tokens. Unikrn did not register the offer and sale of the tokens pursuant to federal
securities laws, nor did the offering qualify for an exemption from the registration requirements.
The Commission ordered the Respondent to pay a $6,100,000.00 civil money penalty to the
Commission. The Commission also created the Fair Fund, pursuant to Section 308(a) of the
Sarbanes-Oxley Act of 2002, so the penalty paid can be distributed to harmed investors.
7.
The Respondent has paid in full. The Fair Fund has been deposited in a
Commission-designated account at the United States Department of the Treasury and any
accrued interest will be added to the Fair Fund.
III.

DEFINITIONS
As used in this Plan, the following definitions will apply:

8.
“Administrative Costs” shall mean any administrative costs and expenses,
including without limitation tax obligations, the fees and expenses of the Tax Administrator and
the Fund Administrator, bond premium expenses, and investment and banking costs.
9.
“Distribution Payment” means a payment from the Fair Fund to a Payee in
accordance with the terms of this Plan.
10.
“Eligible Claimant” means a Preliminary Claimant, who is determined to have
suffered a Recognized Loss, pursuant to the Plan of Allocation, and who is not an Excluded
Party or an Unresponsive Preliminary Claimant.

2

11.

“Excluded Party” shall mean:
(a)

The Respondent;

(b)

Any past or present director or officer of Respondent, or any of
Respondent’s past or present affiliates who served in such a capacity
during the Relevant Period and were directly involved in the conduct
detailed in the Order;

(c)

Any employee or former employee of Respondent or of any of its past or
present affiliates who has been terminated for cause in connection with the
conduct described in the Order or any related Commission action, or who
was otherwise terminated or has resigned in connection with the conduct
described in the Order or any related SEC or criminal action;

(d)

Any affiliates, assigns, creditors, heirs, distributees, spouses, parents,
children, or controlled entities of any of the foregoing persons or entities
described in (a)–(c), above;

(e)

The Fund Administrator, its employees, and those Persons assisting the
Fund Administrator in its role as the Fund Administrator; and

(f)

Any purchaser or assignee of another Person’s right to obtain a recovery
from the Fair Fund for value; provided, however, that this provision shall
not be construed to exclude those Persons who obtained such a right by
gift, inheritance or devise.

12.
“Fair Fund” means the fund created by the Commission pursuant to Section
308(a) of the Sarbanes-Oxley Act of 2002, for the benefit of investors harmed by Respondent’s
violations described in the Order.
13.
“Final Determination Notice” means the written notice sent by the Fund
Administrator to (a) any Preliminary Claimant who timely submitted a written dispute of his, her,
or its calculated Recognized Loss notifying the Preliminary Claimant of its resolution of the
dispute; and (b) those Preliminary Claimants who have not responded to the Plan Notice as
described in paragraph 43, except for those whose Plan Notice were returned as “undeliverable,”
notifying the Preliminary Claimant that he, she, or it has been deemed an Unresponsive
Preliminary Claimant. The Final Determination Notice will constitute the Fund Administrator’s
final ruling regarding the status of the claim.
14.
“Net Available Fair Fund” means the Fair Fund, plus any interest or earnings,
less Administrative Costs.

3

15.
“Payee” means an Eligible Claimant whose distribution amount is equal to or
greater than $10.00, as calculated in accordance with the Plan of Allocation, who will receive a
Distribution Payment.
16.
“Person” means natural individuals as well as legal entities such as corporations,
partnerships, or limited liability companies.
17.
“Plan Notice” means a written notice from the Fund Administrator to each
Preliminary Claimant regarding the Commission’s approval of the Plan, including, as
appropriate: a statement characterizing the distribution; a link to the approved Plan posted on the
Commission’s website and instructions for requesting a copy of the Plan; specification of any
information needed from the Preliminary Claimant to prevent him, her, or it from being deemed
an Unresponsive Preliminary Claimant; his, her, or its preliminary Recognized Loss; a
description of the tax information reporting and other related tax matters; the procedure for the
distribution as set forth in the Plan; and the name and contact information for the Fund
Administrator as a resource for additional information or to contact with questions regarding the
distribution.
18.
“Plan of Allocation” means the methodology by which a Preliminary Claimant’s
Recognized Loss is calculated. The Plan of Allocation is attached as Exhibit A.
19.
“Preliminary Claimant” means a Person, or their lawful successors, identified
by the Fund Administrator based on its review and analysis of applicable records obtained by the
Commission staff during its investigation, who purchased directly from Unikrn, Inc. during the
Relevant Period UKG in either the pre-sale or ICO phase of the Offering and may have suffered
a loss as a result of transactions in UKG
20.
“Recognized Loss” means the amount of loss calculated for a Preliminary
Claimant in accordance with the Plan of Allocation.
21.

“Relevant Period” is between June 11, 2017 and November 7, 2017.

22.
“Unresponsive Preliminary Claimant” means a Preliminary Claimant whose
address the Fund Administrator has not been able to verify and/or who does not timely respond
to the Fund Administrator’s attempts to obtain information, including any information sought in
the Plan Notice. Unresponsive Preliminary Claimants will not be eligible for a distribution under
the Plan.
IV.

TAX COMPLIANCE

23.
On December 17, 2020, the Commission appointed Miller Kaplan Arase LLP as
the tax administrator (the “Tax Administrator”) for the Fair Fund to handle the tax obligations of
the Fair Fund.2 The Tax Administrator will be compensated for reasonable fees and expenses

2

See Order Appointing Tax Administrator, Exchange Act Rel. No. 90700 (Dec. 17, 2020).

4

from the Fair Fund in accordance with its 2019-2021 Engagement Letter Agreement with the
Commission.3
24.
The Fair Fund constitutes a Qualified Settlement Fund (“QSF”) under Section
468B(g) of the Internal Revenue Code of 1986, as amended, 26 U.S.C. § 468B(g), and related
regulations, 26 C.F.R. §§ 1.468B-1 through 1.468B-5. The Tax Administrator is the
administrator of such QSF for purposes of Treas. Reg. § 1.468B-2(k)(3)(I) and shall satisfy the
tax-related administrative requirements imposed by Treas. Reg. § 1.468B-2, including, but not
limited to:
(a)

Obtaining a taxpayer identification number;

(b)

Requesting funds necessary for the timely payment of all applicable taxes,
the payment of taxes for which the Tax Administrator has received funds,
and the filing of applicable returns; and

(c)

Fulfilling any information reporting or withholding requirements imposed
on distributions from the Fair Fund.

25.
All tax obligations will be paid from the Fair Fund, subject to the review and
approval of Commission staff.
V.

FUND ADMINISTRATOR

26.
On December 2, 2021, the Commission appointed Guidehouse, BakerHostetler,
and Pace as the fund administrator for the Fair Fund (the “Fund Administrator”), and the Fund
Administrator has obtained a bond in the amount of $6,100,000, as ordered.4 Pursuant to Rule
1105(a) of the Commission’s Rules, 17 C.F.R. § 201.1105(a), the Fund Administrator may be
removed at any time by order of the Commission or hearing officer.
27.
The Fund Administrator will be responsible for administering the Fair Fund in
accordance with the Plan. This will include, among other things, taking reasonable steps to
obtain accurate mailing information for Preliminary Claimants; establishing a website and
staffing a call center to address inquiries regarding the Plan; disseminating the Plan Notice;
preparing accountings; cooperating with the Tax Administrator appointed by the Commission to
satisfy any tax liabilities and to ensure compliance with income tax reporting requirements,
including but not limited to Foreign Account Tax Compliance Act (FATCA); disbursing the Fair
Fund in accordance with this Plan, as ordered by the Commission; and researching and
reconciling errors and reissuing payments, when possible.
28.
To carry out the purposes of this Plan, the Fund Administrator is authorized to
make and implement immaterial changes to the Plan upon agreement of the Commission staff. If
3

See Omnibus Order Directing the Appointment of Tax Administrator in Administrative Proceedings that Establish
Distribution Funds, Exchange Act Rel. No. 85174 (Feb. 22, 2019).
4
See Order Appointing Fund Administrator and Setting Administrator’s Bond Amount, Exchange Act Rel. No.
93711 (Dec. 2, 2021).

5

a change is deemed to be material by the Commission staff, Commission approval is required
prior to implementation by amending the Plan.
29.
The Fund Administrator may extend any procedural deadline contained in the
Plan for good cause shown, if agreed upon by the Commission staff.
30.
When administering this Plan, the Fund Administrator, and/or each of its
designees, agents and assigns, may rely on: all applicable law; orders issued by the Commission,
including orders issued by delegated authority; orders issued by an administrative law judge, if
any, appointed in this proceeding; and any records, including records containing investor
information, provided by Commission staff.
31.
The Fund Administrator is authorized to enter into agreements with third parties
as may be appropriate or necessary in the administration of the Fair Fund, provided such third
parties are not excluded pursuant to other provisions of this Plan. In connection with such
agreements, the third parties shall be deemed to be agents of the Fund Administrator under this
Plan.
32.
The Fund Administrator will be entitled to payment from the Fair Fund of
reasonable fees and expenses, including the bond premium, incurred in the performance of its
duties (including any such fees and expenses incurred by agents, consultants or third parties
retained by the Fund Administrator in furtherance of its duties).
VI.

PLAN PROCEDURES
Specification of Preliminary Claimants

33.
Using information obtained during and after its investigation, the Commission has
identified the Preliminary Claimants. Preliminary Claimants are limited to only those Persons
who may have suffered a loss as a result of purchasing or acquiring UKG directly from Unikrn
during the Relevant Period.
Procedures for Locating and Notifying Preliminary Claimants
34.
Within thirty (30) days of Commission approval of the Plan, the Fund
Administrator will:
(a)

Establish and maintain a website devoted solely to the Fair Fund. The Fair
Fund’s website will make available a copy of the approved Plan, include a
copy of the Plan Notice, and related materials in downloadable form, and
such other information that the Fund Administrator believes will be
beneficial to Preliminary Claimants.

(b)

Establish and maintain a toll-free telephone number for Preliminary
Claimants to call and speak to a live representative of the Fund

6

Administrator during its regular business hours or, outside of such hours,
to hear pre-recorded information about the Fair Fund.
(c)

Establish and maintain a traditional mailing address and an email address
which will be listed on all correspondence from the Fund Administrator to
Preliminary Claimants as well as on the Fair Fund’s website.

(d)

Establish and maintain a case specific database of all Preliminary
Claimants based upon information provided to and obtained by the Fund
Administrator, including the last known physical and email addresses.

(e)

Run a National Change of Address search to retrieve updated addresses
for all records in the database, thereby ensuring the mailing information
for Preliminary Claimants is up-to-date; and

(f)

Send a Plan Notice to each Preliminary Claimant’s last known email
address (if known) and/or mailing address.

35.
The Commission staff retains the right to review and approve any material posted
on the Fair Fund’s website, any communication with investors, and any scripts used in
connection with communications with investors.
Undeliverable Mail
36.
The Fund Administrator will attempt to locate any Preliminary Claimant whose
mailing is returned as undeliverable by the U.S. Postal Service or otherwise, including an
advanced address search using commercially available resources, if feasible, and will document
all such efforts. If another address is obtained, the Fund Administrator will then resend it the
Preliminary Claimant’s new address within fourteen (14) days of receipt of the returned mail. If
the mailing is returned again, and the Fund Administrator, despite best practicable efforts, is
unable to find a Preliminary Claimant’s correct address, the Fund Administrator, in its discretion,
may deem such Preliminary Claimant an Unresponsive Preliminary Claimant.
37.
The Fund Administrator, with Commission staff approval, may engage a thirdparty search firm to conduct more rigorous searches for Persons whose mailings are returned as
undeliverable.
38.
Any Preliminary Claimant who relocates or otherwise changes contact
information after receipt of the Plan Notice must promptly communicate any change in address
or contact information to the Fund Administrator.
Procedures to Request Plan Notice
39.
Any Person who does not receive a Plan Notice, as described in paragraph 34(f),
but who is aware of this Plan (e.g., through other Preliminary Claimants or on www.sec.gov) and
believes they should be included as a Preliminary Claimant should contact the Fund
7

Administrator, in writing, within sixty (60) days from the approval of the Plan to establish that
they should be considered a Preliminary Claimant. Such Person should include with that
communication, documentation, including blockchain transactional data, sufficient to support
their claim that they should be considered a Preliminary Claimant, as well as contact information
(physical address, telephone number, and email address, if available) for responsive
communications.
40.
The Fund Administrator will verify each Preliminary Claimant’s control over a
digital or physical wallet. If in the discretion of the Fund Administrator, a Preliminary Claimant
fails to prove control over a digital or physical wallet within the allotted time he, she or it will be
deemed ineligible to participate in the distribution of the Fair Fund.
41.
The Fund Administrator will have the right to request any additional information
and/or documentation, including information supporting complicated transaction histories or
involving certain cryptocurrency exchanges. Persons who fail to timely provide additional
information as requested will be deemed ineligible.
42.
The Fund Administrator will send the Person a Plan Notice within twenty (20)
days of receiving the Person’s documentation and proof of address ownership, if the Fund
Administrator determines that the Person should have received a Plan Notice.
Failure to Respond to Plan Notice
43.
If a Preliminary Claimant is requested to respond and fails to respond within
thirty (30) days from the initial mailing of the Plan Notice, the Fund Administrator will make no
fewer than two (2) attempts to contact the Preliminary Claimant by telephone or email. The
second attempt will in no event take place more than sixty (60) days from the initial mailing of
the Plan Notice. If a Preliminary Claimant fails to respond to the Fund Administrator’s contact
attempts as described in this paragraph, the Fund Administrator, in its discretion, may deem such
Preliminary Claimant an Unresponsive Preliminary Claimant.
Distribution Methodology
44.
The Fund Administrator will calculate each Preliminary Claimant’s Recognized
Loss in accordance with the Plan of Allocation using blockchain technology. All Preliminary
Claimants who are determined to have a Recognized Loss, and who are not deemed an Excluded
Party or an Unresponsive Preliminary Claimant will be deemed an Eligible Claimant. All
Eligible Claimants whose distribution amount is equal to or greater than $10.00, as calculated in
accordance with the Plan of Allocation, will be deemed a Payee and receive a Distribution
Payment.
Establishment of a Reserve
45.
Before determining the amount of funds available for distribution and calculating
each Payee’s Distribution Payment, the Fund Administrator, in conjunction with the Tax

8

Administrator, will establish a reserve to pay Administrative Costs and to accommodate any
unexpected expenditures (the “Reserve”).
46.
After all Distribution Payments are made and Administrative Costs paid, any
remaining amounts in the Reserve will become part of the Residual described in paragraph 66
below.
Preparation of the Payment File
47.
Within one hundred eighty (180) days of Commission approval of the Plan, the
Fund Administrator will compile and send to the Commission staff the Payee information,
including the name, address, calculated Recognized Loss, and the amount of the Distribution
Payment for all Payees (the “Payee List”). The Fund Administrator will also provide a
Reasonable Assurances Letter to the Commission staff, representing that the Payee List: (a) was
compiled in accordance with the approved Plan; (b) is accurate as to Payees’ names, addresses,
Recognized Losses and amounts of their Distribution Payment; (c) includes the number of
Payees compensated; (d) the percentage of the Payee’s Recognized Loss being compensated by
the disbursement from the Fair Fund, and if applicable, the total percentage to include all prior
disbursements; (e) the total amount of funds to be disbursed; and (f) provides all information
necessary to make a payment to each Payee.
The Escrow Account
48.
Prior to the disbursement of funds from the Net Available Fair Fund, the Fund
Administrator will establish an escrow account (the “Escrow Account”) with a United States
commercial bank that is a well-capitalized financial institution as defined by the Federal Reserve
Act, Subpart D, 12 C.F.R. § 208.43 and that is not unacceptable to the Commission staff (the
“Bank”), pursuant to an escrow agreement (the “Escrow Agreement”) to be provided by
Commission staff.
49.
The Fund Administrator, pursuant to the Escrow Agreement, shall also establish
with the Bank a separate deposit account (e.g. controlled distribution account, managed
distribution account, linked checking and investment account) (the “Distribution Account”),
insured by the Federal Deposit Insurance Corporation (“FDIC”) up to the guaranteed FDIC pass
through limit. The Distribution Account shall be linked with the Escrow Account and shall be
named, and records maintained, in accordance with the Escrow Agreement.
50. During the term of the Escrow Agreement, the portions of the Fair Fund transferred
to the Escrow Account (the “Escrow Property”) shall be invested and reinvested in short-term
U.S. Treasury securities backed by the full faith and credit of the United States Government or
an agency thereof. The investment shall be, of a type and term necessary to meet the cash
liquidity requirements for payments to Payees and Administrative Costs, including investment or
reinvestment in a bank account insured by the FDIC up to the guaranteed FDIC limit, or in
money market mutual funds registered under the Investment Company Act of 1940 that invest
100% of their assets in direct obligations of the United States Government.

9

51. The Fund Administrator shall provide duplicate original bank and/or investment
statements on any accounts established by the Fund Administrator to the Tax Administrator on a
monthly basis and shall assist the Tax Administrator in obtaining mid-cycle statements, as
necessary.
52. The Fund Administrator, in consultation with the Commission staff, shall work
with the Bank on an ongoing basis to deposit or invest funds in the Escrow and Distribution
Accounts so as to result in the maximum reasonable net return, taking into account the safety of
such deposits or investments and tax implications; and to determine an allocation of funds
between the Escrow and Distribution Account.
53.
All interest, dividends, and/or income earned by the Escrow Property will accrue
for the benefit of the Escrow Property. All Administrative Costs associated with the Escrow and
Distribution Accounts will be the responsibility of the Fund Administrator, who may be
reimbursed for said costs as provided in this Plan. No such Administrative Costs may be paid to
the Bank, its agents, and/or its affiliates from the Escrow Property.
Distribution of the Fair Fund
54.
Upon the Commission’s staff’s receipt, review, and acceptance of the Payee List
and Reasonable Assurances Letter from the Fund Administrator, the Commission staff will seek
an order from the Commission pursuant to Rule 1101(b)(6) of the Commission’s Rules, 17
C.F.R. § 210.1101(b)(6), to disburse funds from the Net Available Fair Fund to the Bank for
distribution by the Fund Administrator in accordance with the Plan. All disbursements will be
made pursuant to a Commission Order.
55.
Upon issuance of an order to disburse, the Commission staff will direct the
transfer of funds in accordance with the Payee List to the Bank. The Fund Administrator will
then use its best efforts to commence mailing Distribution Payment checks and/or effect
electronic payments within fourteen (14) business days of the release of the funds into the
Escrow Account. All efforts will be coordinated to limit the time between the Escrow Account’s
receipt of the funds and the issuance of Distribution Payments.
56.
All checks will be issued by the Fund Administrator from the Distribution
Account. All checks will bear a stale date of ninety (90) days from the date of issuance. Checks
that are not negotiated by the stale date will be voided, and the Bank will be instructed to stop
payment on those checks. A Payee’s claim will be extinguished if he, she, or it fails to negotiate
his, her or its check by the stale date, and the funds will remain in the Fair Fund, except as
provided in paragraph 60.
57.
All Distribution Payments will be preceded or accompanied by a communication
that includes, as appropriate: (a) a statement characterizing the distribution; (b) a statement that
the tax treatment of the distribution is the responsibility of each Payee and that the Payee should
consult his, her or its tax advisor for advice regarding the tax treatment of the distribution; (c) a
statement that checks will be void and cannot be reissued after ninety (90) days from the date the
original check was issued; and (d) contact information for the Fund Administrator for questions
10

regarding the Distribution Payment. The letter or other mailings to Payees characterizing a
Distribution Payment will be submitted to the Tax Administrator and Commission staff for
review and approval.
58.
All Distribution Payments, either on their face or in the accompanying mailing,
will clearly indicate that the money is being distributed from the Fair Fund established by the
Commission to compensate investors for harm as a result of securities law violations.
Post Distribution; Handing of Returned or Uncashed Checks; and Reissues
59.
The Fund Administrator shall use its best efforts to make use of commercially
available resources and other reasonably appropriate means to locate all Payees whose checks
are returned to the Fund Administrator as “undeliverable.” If new address information becomes
available, the Fund Administrator will repackage the distribution check and send it to the new
address. If new address information is not available after a diligent search (and in no event no
later than one hundred twenty (120) days after the initial mailing of the original check) or if the
distribution check is returned again, the check shall be voided and the Fund Administrator shall
instruct the issuing financial institution to stop payment on such check. If the Fund
Administrator is unable to find a Payee’s correct address, the Fund Administrator, in its
discretion, may remove such Payee from the distribution and the allocated Distribution Payment
will remain in the Fair Fund for distribution, if feasible, to the remaining Payees.
60.
The Fund Administrator will reissue checks or electronic payments to Payees
upon the receipt of a valid, written request from the Payee if prior to the initial stale date. In
cases where a Payee is unable to endorse a Distribution Payment check as written (e.g., name
changes, IRA custodian changes, or recipient is deceased) and the Payee or a lawful
representative requests the reissuance of a Distribution Payment check in a different name, the
Fund Administrator will request, and must receive, documentation to support the requested
change. The Fund Administrator will review the documentation to determine the authenticity
and propriety of the change request. If, in the discretion of the Fund Administrator, such change
request is properly documented, the Fund Administrator will issue an appropriately redrawn
Distribution Payment to the requesting party. Reissued checks will be void at the later of one
hundred twenty (120) days from issuance of the original check or thirty (30) days from the
reissuance, and in no event will a check be reissued after one hundred twenty (120) days from
the date of the original issuance without the approval of Commission staff.
61.
The Fund Administrator will work with the Bank and maintain information about
uncashed checks and any returned items due to non-delivery, insufficient addresses, and/or other
deficiencies. The Fund Administrator is responsible for researching and reconciling errors and
reissuing payments when possible. The Fund Administrator is also responsible for accounting
for all payments. The amount of all uncashed and undelivered payments will continue to be held
in the Fair Fund.
62.
The Fund Administrator will make and document its best efforts to contact Payees
to follow-up on the status of uncashed distribution checks over $100 (other than those returned
as “undeliverable”) and take appropriate action to follow-up on the status of uncashed checks at
11

the request of Commission staff. The Fund Administrator may reissue such checks, subject to
the time limits detailed herein.
63.
At the discretion of the Fund Administrator, certain costs that were not factored
into the Reserve, such as bank fees for the return of a payment, may reduce the Payee’s
Distribution Payment. In such situations, the Fund Administrator will immediately notify the
Tax Administrator of the reduction in the Distribution Payment.
Receipt of Additional Funds
64.
Should any additional funds be received pursuant to Commission or Court order,
agreement, or otherwise, prior to the Commission’s termination of the Fair Fund, such funds will
be added to the Fair Fund and distributed, if feasible, in accordance with the Plan, pursuant to the
Commission’s Rules.
Disposition of Undistributed Funds
65.
If funds remain following the initial distribution and payment of all
Administrative Costs, the Fund Administrator, in consultation with the Commission staff, may
seek subsequent distribution(s) of any available remaining funds, pursuant to the Commission’s
Rules. All subsequent distributions shall be made in a manner that is consistent with this Plan.
66.
A residual within the Fair Fund will be established for any amounts remaining
after the final disbursement to Payees from the Fair Fund and the payment of all Administrative
Costs (the “Residual”). The Residual may include funds from, among other things, amounts
remaining in the Reserve, distribution checks that have not been cashed, checks or electronic
payments that were not delivered or were returned to the Commission, and tax refunds for
overpayment of taxes or for waiver of IRS penalties.
67.
All funds remaining in the Residual that are infeasible to distribute to investors
will be returned to the Commission and transferred to the U.S. Treasury, subject to Section
21F(g)(3) of the Securities Exchange Act of 1934 (the “Exchange Act”), after the final
accounting is approved by the Commission.
Administrative Costs
68.
All Administrative Costs will be paid from the Fair Fund in accordance with the
Commission’s Rules.
Accountings
69.
In accordance with Rule 1105(f) of the Commission’s Rules, during the first ten
(10) days of each calendar quarter after funds have been transferred to the Bank, the Fund
Administrator will file with the Commission, on a standardized accounting form provided by the
Commission staff, an accounting of all monies earned or received and all monies spent in
connection with the administration of the Plan.
12

70.
Upon completion of all distributions to Payees pursuant to the procedures
described above, the Fund Administrator shall arrange for the payment of all Administrative
Costs, transfer all remaining funds to the Commission, and submit a final accounting for
approval by the Commission on a standardized form provided by the Commission staff. The
Fund Administrator will also submit a report to the Commission staff containing the final
distribution statistics regarding distributions to individuals and entities, and such other
information requested by the Commission staff.
Wind-down and Document Retention
71.
The Fund Administrator will shut down the website, P.O. Box and customer
service telephone line(s) established specifically for the administration of the Fair Fund six (6)
months after the transfer of any remaining funds to the Commission, or at such earlier time as the
Fund Administrator determines with the concurrence of the Commission staff.
72.
The Fund Administrator will retain all materials submitted by Preliminary
Claimants in either paper or electronic form for a period of six (6) years from the date of
approval of a final fund accounting. Materials maintained in electronic form must be accessible
and readable for the duration of retention. Pursuant to the Commission staff's direction, the Fund
Administrator will either turn over to the Commission or destroy all materials, including
documents in any media, upon expiration of this period.
Termination of the Fair Fund
73.
The Fair Fund will be eligible for termination and the Fund Administrator will be
eligible for discharge after all of the following have occurred (a) a final accounting, in a standard
accounting format provided by the Commission staff, has been submitted by the Fund
Administrator and approved by the Commission; (b) all Administrative Costs have been paid;
and (c) any amount remaining in the Fair Fund has been returned to the Commission for transfer
to U.S. Treasury. Once the Commission has approved the final accounting, the Commission
staff will seek an order from the Commission authorizing: (a) the transfer of the Residual that is
infeasible to return to investors, and any amounts returned to the Fair Fund in the future that is
infeasible to return to investors, to the general fund of the U.S. Treasury, subject to Section
21F(g)(3) of the Exchange Act; (b) discharge of the Fund Administrator; (c) cancellation of the
Fund Administrator’s bond; and (d) termination of the Fair Fund.
VII.

NOTICE OF PROPOSED PLAN AND OPPORTUNITY FOR COMMENT

74.
The Notice of the Proposed Plan of Distribution and Opportunity for Comment
(the “Notice”) shall be published on the Commission’s website
http://www.sec.gov/litigation/fairfundlist.htm. Any Person wishing to comment on the Plan
must do so in writing by submitting their comments within thirty (30) days of the date of the
Notice (a) to the Office of the Secretary, United States Securities and Exchange Commission,
100 F Street, N.E., Washington, D.C. 20549-1090; (b) by using the Commission’s Internet
comment form (www.sec.gov/litigation/admin.shtml); or (c) by sending an e-mail to rule13

comments@sec.gov. Comments submitted by e-mail or via the Commission’s website should
include “Administrative Proceeding File No. 3-20003 in the subject line. Comments received
will be publicly available. Persons should only submit comments that they wish to make
publicly available.

14

Exhibit A
PLAN OF ALLOCATION
This Plan of Allocation is designed to compensate investors based on their losses in
Unikoin Gold (“UKG”), a digital token, purchased or acquired between June 11, 2017 and
November 7, 2017 (the “Relevant Period”) from Unikrn Inc. in either the pre-sale or ICO phase
of the Offering.1 Investors who did not purchase UKG from Unikrn are ineligible to recover
under this Plan. Based upon records obtained by the Commission during and after its
investigation, the Fund Administrator has identified those investors who may have suffered
losses as a result of purchasing UKG during the Relevant Period (the “Preliminary Claimants”).
The Fund Administrator will calculate each Preliminary Claimant’s loss (“Recognized
Loss”) as (a) the sum of the purchase amounts for all UKG purchased and/or acquired by a
Preliminary Claimant from Unikrn, Inc. in either the pre-sale or ICO phase of the Offering for
value during the Relevant Period, less (b) any proceeds from sales of UKG by a Preliminary
Claimant from June 11, 2017 through October 31, 2020.2 If the Recognized Loss calculates to a
negative number, reflecting an overall gain, the Recognized Loss shall be zero.
Time of acquisitions or sales will be determined based on the transaction timestamp with
the associated transaction hash on the blockchain. For purposes of the calculations in the Plan,
prices and values will be based on the approximate timestamp of the transaction and exclude all
fees and commissions. In addition, purchase amounts and sales proceeds will be converted to
U.S. Dollars using the respective exchange rate as of 4:00 PM eastern standard time on the
purchase or sale date. For the avoidance of doubt, calculations of purchase and sale prices will
include only the amount of value that was converted into UKG tokens (in the case of a purchase)
or received by the seller (in the case of a sale), and investors will not be compensated for gas fees
or transactions fees to transfer value.
Any Preliminary Claimant who suffered a Recognized Loss pursuant to this Plan of
Allocation, and who is not an Excluded Party or an Unresponsive Preliminary Claimant, as
defined in the Plan, will be deemed an Eligible Claimant.
Additional Provisions
FIFO Methodology: Transactions for an Eligible Claimant who made multiple purchases
and sales of UKG will be matched according to the first-in, first-out (“FIFO”) method. The
earliest sales will be matched first against purchases from June 11, 2017, until all the purchases
have been matched. For example, if an Eligible Claimant purchased 100 UKG on June 11, 2017,
the first 100 UKG sold through October 31, 2020 will be matched to the purchases and their
sales proceeds will be included the Recognized Loss calculation.

1

All capitalized terms used herein but not defined shall have the same meanings ascribed to them in the Plan.
The “sale price of the token,” as used herein, will be ascertained through the public blockchain ledger. Any tokens
held after October 31, 2020 are assumed to have a value of $0.00 because the tokens were ordered to be permanently
disabled and removed from trading platforms no later than September 25, 2020 (see Order, para. 23).
2

Allocation of Funds: If the Net Available Fair Fund is equal to or exceeds the sum of
Recognized Losses of all Eligible Claimants, each Eligible Claimant’s distribution amount will
equal his, her or its Recognized Loss, plus any “Reasonable Interest” awarded.
If the Net Available Fair Fund is less than the sum of the Recognized Losses of all
Eligible Claimants, each Eligible Claimant’s distribution amount will equal his, her or its “Pro
Rata Percent” of the Net Available Fair Fund. In either case, the distribution amount will be
subject to the “Offset for Prior Recovery” and the “Minimum Distribution Amount.”
Offset for Prior Recovery: To avoid payment of a windfall, an Eligible Claimant’s
distribution amount will be no larger than his, her or its Recognized Loss minus the amount of
any compensation for the loss that resulted from the conduct described in the Order that was
received from another source (e.g., class action settlement), to the extent known by the Fund
Administrator (“Prior Recovery”), plus any “Reasonable Interest” awarded. That is, the
distribution amount will be capped at the Recognized Loss less the Prior Recovery, plus any
“Reasonable Interest” awarded.
Reasonable Interest: If the Net Available Fair Fund exceeds the amount necessary to pay
all Eligible Claimants their Recognized Losses (minus any Prior Recovery) in full, the Fund
Administrator, in consultation with the Commission staff, may include interest in the distribution
amount to compensate Eligible Claimants for the time value of money. Reasonable Interest will
be calculated using the Short-term Applicable Federal Rate plus three percent (3%), compounded
quarterly from the end of the Relevant Period through the approximate date of the disbursement
of the funds. If there are insufficient funds to pay Reasonable Interest in full to all Eligible
Claimants, each Eligible Claimant’s Reasonable Interest amount will be equal to his, her or its
Pro Rata Percent of the excess funds.
Pro Rata Percent: A Pro Rata Percent computation is intended to measure Eligible
Claimants’ Recognized Losses against one another. The Fund Administrator shall determine
each Eligible Claimant’s Pro Rata Percent as the ratio of his, her, or its Recognized Loss to the
sum of Recognized Losses of all Eligible Claimants.
Minimum Distribution Amount: The Minimum Distribution Amount will be $10.00
(inclusive of Reasonable Interest, if any). If an Eligible Claimant’s distribution amount is less
than the Minimum Distribution Amount, that Eligible Claimant will be deemed ineligible to
receive a Distribution Payment and his, her, or its distribution amount will be reallocated on a
pro-rata basis to Eligible Claimants whose distribution amounts are greater than or equal to the
Minimum Distribution Amount.
Payee: An Eligible Claimant whose distribution amount equals or exceeds the Minimum
Distribution Amount will be deemed a Payee.
Distribution Payment: Each Payee will receive a Distribution Payment equal to his, her,
or its distribution amount.

2

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Asec%3A4cc26ea1d62eee6b. Public record. Not legal advice.