A U.S. federal court has sided with the Securities and Exchange Commission (SEC), defining crypto mining devices as securities. This comes as the SEC continues to prosecute Green United LLC for selling crypto mining hardware in what the commission said was a fraudulent scheme.
Judge Defines Crypto ‘Boxes’ as Securities
In a recent ruling, U.S. District Court Judge Ann Marie McIff Allen determined that Green United’s mining devices, referred to as “Green Boxes,” meet the legal definition of securities under U.S. law.
The SEC accused Green United LLC of defrauding investors out of $18 million by falsely promoting the Green Boxes as miners for a non-existent token known as GREEN on a fictitious blockchain network.
The court has established that the SEC has proved beyond the normal doubt the existence of an investment contract through the sale of these devices and a hosting agreement for the operation of the Green Boxes. The judge rejected Green United’s argument that its products were not securities, stating that the agency had adequately alleged all necessary elements of a security.
US SEC’s Fraud Allegations Against Green United LLC
The current case against Green United LLC and its executives Wright Thurston and Kristoffer Krohn by the SEC stems from the allegation that the company defrauded investors by promoting the Green Boxes as being capable of mining the GREEN token. However, these devices were used to mine Bitcoin and this was not made known to the investors.
The regulator claimed that the GREEN token never existed and any distribution of the GREEN tokens was arbitrary and under the control of Thurston, not as a result of mining activities.
The decision of Judge Allen also stated that Green United gave an impression to investors that they are making GREEN tokens through the mining devices. However, the fact of the matter was that the investors were getting GREEN on the basis of the sole discretion of the management of the company and this went in the favor of the SECs case of fraudulent misrepresentation.
Green United’s Motion to Dismiss Denied
The court also dismissed Green United’s motion to dismiss the Securities and Exchange Commission’s lawsuit, which it said that the SEC had sufficiently plead its case. The company also said that the SEC has no jurisdiction with regard to the digital assets in question and that the enforcement action was completely outside the agency’s remit.
Nevertheless, Judge Allen dismissed these claims stating that the actions of the SEC were in line with the enabling laws of the regulatory body that was established many years ago. This ruling paves way for the Securities and Exchange Commission’s fraud allegations against Green United and its executives to move to the subsequent phases of the legal process such as the discovery and trial phases.
Concurrently, the US SEC has revealed a settlement of charges with TrustToken, the organization behind the TrueUSD stablecoin. Both TrustToken and TrueCoin were mentioned in the settlement as the markets regulator accused the two of selling unregulated securities to the public.
Kelvin Munene Murithi
Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.
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