SEC accuses Utah company of ‘fraudulent’ $18 million crypto mining scheme

Software and crypto mining equipment offered by Utah-based Green United LLC was part of an $18 million “fraudulent scheme” that never mined the crypto it said it would, according to allegations from the US Securities and Exchange Commission (SEC). ).

The regulator filed a complaint in a Utah court on March 3 against Green United, its founder, Wright Thurston, and contracted promoter Kristoffer Krohn.

It alleges that the company and its two representatives fraudulently offered securities between April 2018 and December 2022 by selling investments in $3,000 “Green Boxes” and “Green nodes” alleged to hold the GREEN token on the “Green Blockchain.” “mining.

Investors were reportedly told that the company would develop the Green Blockchain to create a “public global decentralized power grid” and that the GREEN token would increase in value based on its efforts with returns of up to 50% per month.

However, the SEC claimed that the hardware sold did not mine GREEN because it was an Ethereum-based ERC-20 token that could not be mined and the green blockchain did not exist.

It added that the GREEN token was created “several months” after the initial hardware sale to investors and distributed periodically to “give the appearance of a successful mining operation”.

Instead, according to the SEC, the real plan used the money to buy S9 Antminers — Bitcoin (BTC) mining rigs — passed off as the green “boxes” and “nodes” for investors. The company has been mining Bitcoin, not GREEN tokens, which the investors “didn’t receive”.

Is the SEC going after mining?

Meanwhile, on Twitter, the crypto community has hosed down one interpretation of the SEC complaint, which suggests that the SEC is going after crypto miners arguing that selling miners or offering them hosting is a securities investment contract for them.

Taking came from a March 6 tweet from the pseudonymous lawyer “MetaLawMan.”

However, crypto lawyer and investment advisor, Timothy Peterson, argued that the interpretation was a “bad take”, adding that the case does not “target mining in general”.

“The SEC is not saying ‘all mining equipment sales are now a certainty,'” Peterson clarified.

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Another crypto commentator, Dennis Porter, CEO of the Bitcoin advocacy group, the Satoshi Action Fund, tweeted that “the SEC is not coming after mining” and that it “did not classify hosting as a security” and said Green United’s operation “was a scam in disguise”. as mining.”

The SEC has sought an injunction to require Thurston, Krohn and Green United to cease operations, is seeking civil penalties for securities law violations and reimbursement of the $18 million in alleged ill-gotten gains.