SEC charges Utah firm of 'fraudulent' $18 million crypto mining scam

By: Micheal Wilson

March 7, 2023 6:41 AM

The U.S. Securities and Exchange Commission declared Green Union's operation a fraud, prompting the community to allay concerns that the SEC might classify crypto mining as a security.

According to the US Securities and Exchange Commission, software and crypto mining equipment offered by Utah-based Green United LLC were part of a $18 million "fraudulent scheme" that never mined the coin it promised (SEC).

On March 3, the regulator filed a case against Green United, its creator, Wright Thurston, and contractual promoter Kristoffer Krohn in a Utah District Court.

According to the complaint, the company and the two salespeople sold investments in $3,000 "Green Boxes" and "Green nodes" purporting to mine the GREEN token on the "Green Blockchain" between April 2018 and December 2022.

Investors were allegedly told that the company was developing the Green Blockchain to create a "public worldwide decentralized power system," and that the GREEN token would gain in value as a result of its efforts, with monthly returns of up to 50%.

The SEC, on the other hand, stated that the hardware offered 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 went on to say that the GREEN token was developed "many months" after the first hardware sales to investors and was issued on a regular basis to "create the illusion of a successful mining operation."

Instead the underlying fraud, according to the SEC, was utilizing the cash to acquire S9 Antminers – Bitcoin (BTC) mining rigs — which were passed off as the Green "boxes" and "nodes" to investors. The company mined Bitcoin rather than GREEN tokens, which investors "did not receive."

Meanwhile, the crypto community on Twitter has slammed one interpretation of the SEC lawsuit, claiming that the SEC is targeting crypto miners, claiming that selling miners or hosting them is a securities investment contract.

The opinion was expressed in a tweet on March 6 by the pseudonymous lawyer "MetaLawMan."

Nevertheless, cryptocurrency supporter and investment consultant Timothy Peterson stated that the interpretation was a "poor view," and that the judgment did not "target mining in general."

"The SEC is not stating that all transactions of mining equipment are now securities," Peterson clarified.

Dennis Porter, CEO of the Bitcoin advocacy group Satoshi Action Fund, stated that "the SEC is not coming after mining" and that it "does not define hosting as a security," and that Green United's operation was "a scam disguised as mining."

The SEC has requested a court order requiring Thurston, Krohn, and Green United to discontinue activities, as well as civil penalties for securities law violations and repayment of the allegedly ill-gotten proceeds of $18 million.