A recent ruling by a U.S. court has brought to light the fraudulent activities of Green United, a crypto mining company, which has been accused by the Securities and Exchange Commission (SEC) of misleading investors by selling securities in the form of mining equipment. The court’s decision to reject Green United’s motion to dismiss the civil fraud lawsuit has shed light on the company’s deceptive practices.
The essence of the fraud revolves around Green United’s sale of mining equipment, known as “Green Boxes,” which the SEC claims to be part of a securities transaction. The company, led by founder Wright Thurston and promoter Kristoffer Krohn, promised investors significant monthly returns of up to 50% by investing in these mining devices. However, the SEC found that Green United never engaged in actual green mining activities but instead diverted investor funds towards mining Bitcoin for their own profit.
The SEC alleges that Green United defrauded investors by selling them devices with hosting agreements that promised substantial profits without actually mining tokens as promised. The U.S. District Court for the District of Utah sided with the SEC, affirming that Green United’s actions constituted securities fraud, as the company raised $18 million from investors under false pretenses.
Despite Green United’s claims that no investors lost money and that the SEC’s allegations were unfounded, the court ruled against the company. Thurston and Krohn argued that the SEC’s classification of hosted mining as a security was unjust and that the regulator’s enforcement measures lacked clarity and consistency. However, the judge found their arguments to be unconvincing and upheld the SEC’s claims.
In addition to targeting mining hardware, the SEC has also cracked down on the sale of non-fungible tokens (NFTs) as unregistered securities. Companies like Impact Theory and Flyfish Club, LLC, have faced legal action for selling NFTs without proper registration. The SEC’s stance on cryptocurrencies as securities is guided by the Howey test, a legal framework that determines whether an asset qualifies as a security based on various factors.
Overall, the SEC’s scrutiny of Green United and other companies in the crypto space highlights the regulator’s commitment to enforcing securities laws in the digital asset industry. As the regulatory landscape continues to evolve, businesses operating in the crypto sector must adhere to compliance standards to avoid legal repercussions.