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A Utah federal judge has rejected Kristoffer Krohn’s appeal to dismiss the Securities and Exchange Commission’s (SEC) lawsuit against him and Green United LLC, an alleged fraud crypto mining operation. Judge Ann Marie McIff Allen denied the appeal on November 26, reaffirming her earlier decision from September to proceed with the SEC’s case.
Krohn, accused of promoting the crypto scheme, argued that the SEC failed to prove that Green United’s “Green Boxes” and “Green Nodes” constituted investment contracts under securities law. He further claimed the SEC misinterpreted aspects of the Howey test, which determines whether a transaction qualifies as a security. However, the judge dismissed his arguments, stating Krohn had selectively misapplied definitions and lacked legal support for his claims.
“The Court declines to certify this case for interlocutory appeal because Mr. Krohn has not shown any substantial ground for difference of opinion,” Judge Allen wrote in her ruling.
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Allegations of a $18 Million Fraud
The SEC’s lawsuit, filed in 2023, alleges that Green United executives orchestrated an $18 million fraud scheme between April 2018 and December 2022. Investors were lured with promises of substantial returns from a proprietary “Green Blockchain” and its associated GREEN token. The company marketed its “Green Boxes” as specialized mining hardware for this blockchain.
Contrary to these claims, the SEC asserts that the Green Blockchain was never developed and that the GREEN token was created only after hardware sales began. To maintain the illusion of success, tokens were sporadically distributed to investors. In reality, the hardware allegedly mined Bitcoin—a far cry from the promised innovative blockchain technology.
Green United founder Wright Thurston has also filed a separate motion to dismiss the case, leaving additional legal battles on the horizon.
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Implications for Crypto Regulation
This ruling strengthens the SEC’s stance in its crackdown on fraud activities in the crypto space. By rejecting Krohn’s appeal, the court signals that promoters of questionable schemes cannot evade accountability through technical arguments.
The case highlights the SEC’s continued use of the Howey test as a cornerstone in defining and regulating crypto-related securities.
