The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Utah-based firm Green United, accusing the company of violating federal securities laws by selling $18 million worth of fake cryptocurrency mining equipment.
According to the SEC, Green United and its founder, Wright Thurston, and promoter, Kristoffer Krohn, offered investments in $3,000 “Green Boxes,” which were supposedly specialized crypto mining machines that mined GREEN tokens on the Green Blockchain. Investors were promised a monthly return of 40% to 50%.
The real scheme of Green United
The SEC alleges that Green United’s mining machines never mined GREEN because it wasn’t a mineable cryptocurrency asset, and the so-called Green Blockchain didn’t exist. Instead, Thurston created the GREEN tokens himself on the Ethereum blockchain and distributed them to investors’ wallets months after selling the machines.
The SEC further adds that Green United’s real scheme was to deceive investors into buying bitcoin mining equipment disguised as “Green Boxes.” Investors’ purchases mined bitcoin, which they never received. The SEC seeks permanent injunctions, disgorgement, and civil penalties against Green United, Thurston, and Krohn.
This is not Krohn’s first run-in with the SEC, as he was previously accused of violating federal securities laws in connection with a real estate investment program in 2012.
SEC targeting crypto mining?
Meanwhile, the crypto community on Twitter 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 hosting for them is a securities investment contract.
The idea came in a March 6 tweet from a pseudonymous lawyer, “MetaLawMan.” However, crypto proponent and co-founder of bitcoin security firm Casa argued that the SEC’s problem with this operation is not that they sold mining equipment.
The issue the SEC has with this operation is not that they were selling mining equipment, it's that they were selling some stupid token that came with the expectation of future profit as a result of development that the company selling the tokens was promising.
— Jameson Lopp (@lopp) March 6, 2023
On the same day, the SEC also filed an emergency action against BKCoin Management LLC and its principal, Kevin Kang, for allegedly running a $100 million crypto fraud scheme. BKCoin and Kang have been accused of using some of the money for personal use and Ponzi-like payments instead of investing in crypto assets as promised to investors.