A US federal court has ruled that crypto mining devices sold by Green United are securities, satisfying the claims made by the Securities and Exchange Commission (SEC).
What is the essence of the fraud?
In March 2023, Utah-based mining company Green United was accused of fraud. The SEC charged the company with violating the Securities Act and selling fake assets worth $18 million. The case involved the company's founder, Wright Thurston, and leading promoter, Kristoffer Krohn. They positioned their business as green mining, offering clients investment opportunities in equipment with a promised monthly income of up to 50%, requiring a minimum investment of $3,000. The SEC concluded that Green United was not involved in green mining but directed client funds to mine Bitcoin (BTC) and took the profits for themselves.
Green United claims no investors lost money
In response to the SEC's claims, Green United stated that no investors lost money and that the regulator’s allegations were baseless. The company argued that the SEC was trying to rewrite the law by classifying hosted mining as a security. In May, the company's executives motioned to dismiss the SEC’s lawsuit, stating that Congress had refused the SEC’s authority to regulate the crypto sector. However, the judge ruled that the defendants failed to prove their innocence.
What else does the SEC consider securities?
In addition to mining hardware, the SEC equated the sale of NFTs to transactions in unregistered securities. The regulator notified OpenSea that NFTs on the platform may be considered unregistered securities and ruled against Flyfish Club, LLC for conducting an unregistered offering of cryptocurrency securities by selling NFT. According to SEC, all cryptocurrencies except Bitcoin should be considered as securities.
Thus, the federal court ruled that Green United misled its investors regarding the nature of its products and activities, leading to significant investment losses. This decision serves as a warning to other companies involved in cryptocurrencies.
