Crypto Mining Devices Allegedly Securities in SEC Lawsuit - Coincu

Key Points:

• Green United LLC is facing a lawsuit from the SEC for allegedly running fraudulent crypto mining devices that defrauded investors of approximately $18 million.
• A federal court stated that the SEC had provided sufficient evidence to classify Green United’s offerings as investment contracts subject to securities laws.

Green United LLC finds itself in the most serious of legal issues regarding a lawsuit filed against it by the U.S. Securities and Exchange Commission.

Read more: SEC Chair Gary Gensler Still Defends Positive View on Blockchain

SEC Charges Green United LLC with Selling Sham Crypto Mining Devices

The SEC alleges that Green United, under its bosses Wright Thurston and Kristoffer Krohn, perpetrated a scheme in the sale of crypto mining devices to raise about $18 million from investors.

According to the SEC, from April 2018 to December 2022, Green United marketed its products, called “Green Boxes” and “Green nodes,” as essential to mining a sham cryptocurrency called GREEN. The problem is that such an offering was, in fact, an investment contract, thus falling under federal securities laws, and investors were deceived regarding possible returns.

In a recent order dated September 23, US District Judge Ann Marie McIff Allen denied Green United’s motion to dismiss the SEC’s case for civil fraud. The judge ruled that the SEC had sufficiently made out its case that the Green Boxes were security based on the related hosting agreements.

Green Token Scheme Hoodwinked Investors

Allen made this determination by pointing out that investors were misled to mine GREEN tokens, which were never issued, and that the distribution of the non-issued cryptocurrency was in the hands of Thurston.

Despite attempts by Thurston and Krohn to argue that the SEC exceeded its jurisdiction with respect to digital assets, the judge promptly rejected such an argument because the underlying laws regarding securities have existed for decades.

The court ruled that investors had indeed received standard crypto mining devices and not the promised GREEN mining equipment which did not yield any real profits. As this case continues to unfold, Green United will face some serious fraud allegations as further investigations might arise, or even a trial for the situation.

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