Green United LLC has been unsuccessful in its attempt to dismiss a lawsuit brought against it by the US Securities and Exchange Commission (SEC).
The SEC accused the company and its executives, Wright Thurston and Kristoffer Krohn, of orchestrating a fraudulent cryptocurrency mining scheme. The scheme allegedly defrauded investors out of $18 million.
The lawsuit, filed in March 2024, alleges that Thurston and Krohn marketed and sold “Green Boxes” and “Green Nodes” as part of a mining operation for a digital asset called the GREEN token, supposedly on the “Green Blockchain.”
However, according to the SEC, the promised blockchain never existed. Furthermore, the mining equipment sold to investors was, in fact, ordinary Bitcoin mining rigs that did not mine GREEN tokens as advertised.
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Judge Rejects Motion To Dismiss SEC Lawsuit
In a decision on September 23, Judge Ann Marie McIff Allen rejected the defendants’ motion to dismiss the case. “The SEC has adequately alleged all necessary elements of a security in the form of an investment contract,” Judge Allen noted in her ruling.
The judge also dismissed Thurston’s defense against the SEC’s fraud claims, stating that his actions created the “illusion” that investors were earning GREEN tokens through mining activities.
Instead, the distribution of these tokens was entirely at Thurston’s discretion, purportedly based on the number of Green Boxes owned by each investor. “This constitutes a deceptive act in furtherance of the Green Box fraud,” Judge Allen concluded.
Yet Another SEC Crypto-Victory (Sorry Green United, Your Infamous “Green Boxes” and the Software Contained Inside Them, Are Securities, and Your Motion to Dismiss is Denied)
This SEC crypto-enforcement action began on March 8, 2023, when the SEC charged Thurston and Green… pic.twitter.com/3ivV5aWUHA
— John Reed Stark (@JohnReedStark) September 24, 2024
The SEC further alleged that investors never received any mined Bitcoin as initially promised and were misled about the capabilities of the hardware they purchased.
The $18 million raised through this scheme was, therefore, obtained under false pretenses, according to the SEC’s claims.
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Thurston and Krohn Claimed SEC Lacked Authority Over Case
Thurston and Krohn had argued that the SEC lacked the authority to regulate digital assets, asserting that Congress had not granted such power to the agency.
They contended that the SEC’s enforcement actions violated the Due Process Clause and the separation of powers as defined in the U.S. Constitution.
However, Judge Allen dismissed this argument as well, stating, “This action does not present any novel attempt at regulation by the SEC. Rather, the SEC, by this action, pursues the regulatory goals Congress set for it ninety years ago.”
Green United LLC was founded by Wright Thurston in Utah and operated from April 2018 until at least December 2022, with Kristoffer Krohn playing a significant role in promoting the scheme through contractual agreements.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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