An SEC suit against Green United, a firm accused of scamming investors with promises of cloud mining, can proceed to trial.
Claims that crypto mining devices constitute securities are incorrect, and are based on a misinterpretation of court documents.
The U.S. Securities and Exchange Commission’s (SEC) lawsuit against Green United can proceed to trial, a Utah judge ruled Monday.
Last March, the SEC accused the Utah-based operation of scamming investors out of $18 million by selling them phony crypto mining equipment via a multi-level marketing scheme in which the company’s affiliates received a portion of the proceeds from each of the $3,000 “Green Boxes” they sold.
According to the SEC’s complaint, investors were told that the so-called Green Boxes were specialized crypto miners that mined GREEN tokens on the Green Blockchain – which they allegedly claimed supported a “public global decentralized power grid” – and could generate 40% to 50% monthly returns. Investors never physically received their equipment, and were told that the machines would be remotely hosted at a Green United-controlled data center.
In reality, the Green Blockchain didn’t exist, but the Green Boxes did – sort of.
Green United’s founder, Will Thurston (who, along with promoter Kristoffer Krohn, is also named as a defendant in the lawsuit), allegedly used the money investors gave him for the phony Green Boxes and used it to buy S9 Antminers – commercially-available bitcoin mining machines – which he then used to mine bitcoin for himself. According to the SEC, investors didn’t see any of the actual bitcoin (BTC) their purchases mined, but instead received periodic distributions of worthless GREEN tokens created by Thurston on the Ethereum blockchain.
Though Green United’s lawyers attempted to have the case dismissed, U.S. District Court Judge Ann Marie McIff Allen ruled that the SEC has “sufficiently alleged a security in the form of Green Boxes” to allow the case to proceed to trial, as well as its allegations of fraud.
The ruling caused something of a stir in online crypto circles, with at least one large X account claiming (in a since-deleted post) that the “SEC says crypto mining devices are securities.”
“This is wrong. Remain calm,” responded Neeraj Agrawal, director of communications at crypto lobbying group Coin Center. “This has no bearing on managed crypto mining. It’s garden variety ‘cloud mining’ scamming.”
The judge’s Monday ruling makes no mention of the real S9 Antminers – or bitcoin – Green United was allegedly buying with investor funds.
