TLDR
- Green United LLC could not fend off the SEC's legal action concerning allegations of an $18 million crypto mining scheme.
- The SEC has charged company leaders with selling mining gear for a fictitious blockchain network.
- According to the judge, the SEC has successfully laid out all aspects required to qualify the arrangement as a security, framing it as an investment agreement.
- Efforts by the defendants to argue that digital assets fall outside the SEC's purview have been dismissed.
- Legal proceedings will now advance to either the information-gathering phase or a trial.
A cryptocurrency mining company, Green United LLC, failed in its legal move to get a dismissal of the SEC's claims in court.
The legal matter, which features accusations of an $18M crypto mining scam, is moving forward after the judge's decision. Executives Wright Thurston and Kristoffer Krohn, according to the SEC, spearheaded a deceptive operation involving the sale of mining apparatus for a blockchain that wasn't real.
It is asserted that they promoted 'Green Boxes' and 'Green Nodes' as devices capable of mining a currency known as GREEN on a so-called 'Green Blockchain.'
On September 23, Judge Ann Marie McIff Allen ruled, indicating that the SEC's securities allegations were not successfully refuted by the defendants.
The judge found the SEC's assertions regarding investment contracts as securities to be appropriately made.
The SEC alleges that the operation brought in around $18 million. It seems investors never received the Bitcoin mining results they were led to expect.
In place of producing the promised GREEN tokens, the hardware was essentially redirected for mining Bitcoin.
Judge Allen decided not to dismiss the SEC's fraud charges against Thurston, believing his conduct gave the false impression of earning GREEN tokens from mining when token distribution was reportedly handled at his discretion, depending on the number of Green Boxes purchased.
The defense claimed the SEC didn't have the jurisdiction over digital currency. They argued Congress had contemplated and denied such regulatory power.
Yet, Judge Allen brushed aside this contention, asserting the SEC wasn't pioneering new regulations but working within long-standing congressional intent.
This ruling signifies the lawsuit is stepping into its subsequent legal phase, usually involving discovery or courtroom trials.
The SEC sees this as a crucial push in its campaign to root out purported deceitful conduct within the crypto industry.
Green United, initiated by Thurston in Utah, remained operational from April 2018 until at least December 2022. Krohn contributed contractually to the promotion of the setup. They submitted dismissal motions on May 19, which have since been overturned.
The ongoing matters in this case reflect the cryptocurrency sector's hurdles, where distinguishing groundbreaking ventures from shady dealings is a fine line. This also highlights the SEC's resolve to apply securities law to digital assets amidst ongoing debates over its regulatory scope.
The Editor-in-Chief at Blockonomi and the mind behind Kooc Media, a UK-based online firm, is an advocate for Open-Source Software, Blockchain Tech, and an Internet that's free and fair for everyone.
