SEC Lawsuit Against Green United Crypto Mining Scheme Advances to Trial

TLDR

• SEC lawsuit against Green United for alleged crypto mining scam can proceed to trial
• Green United accused of selling fake “Green Boxes” for $3,000 each through multi-level marketing
• Investors were promised 40-50% monthly returns from mining non-existent GREEN tokens
• Company allegedly used investor funds to buy real Bitcoin miners for personal profit
• Judge ruled SEC has sufficiently alleged security in the form of Green Boxes to proceed

A federal judge in Utah has ruled that the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Green United, a company accused of running a fraudulent cryptocurrency mining scheme, can proceed to trial.

The case, filed in March, alleges that Green United scammed investors out of $18 million through the sale of fake mining equipment.

According to the SEC’s complaint, Green United sold “Green Boxes” to investors for $3,000 each, claiming these devices were specialized crypto miners capable of generating 40% to 50% monthly returns.

The company told investors that the Green Boxes would mine GREEN tokens on the “Green Blockchain,” which supposedly supported a “public global decentralized power grid.”

However, the SEC alleges that neither the Green Blockchain nor the GREEN tokens actually existed. Investors never received physical mining equipment, as they were told the machines would be hosted remotely at a Green United-controlled data center.

The company’s founder, Will Thurston, and promoter Kristoffer Krohn are named as defendants in the lawsuit. The SEC claims that Thurston used investor funds to purchase real Bitcoin mining machines, specifically S9 Antminers, which he then used to mine Bitcoin for personal profit.

Investors allegedly received periodic distributions of worthless GREEN tokens created on the Ethereum blockchain, rather than any real cryptocurrency.

Green United operated through a multi-level marketing scheme, where affiliates received a portion of the proceeds from each Green Box they sold. This structure allowed the company to rapidly expand its reach and attract more investors.

U.S. District Court Judge Ann Marie McIff Allen ruled on Monday that the SEC has “sufficiently alleged a security in the form of Green Boxes” to allow the case to move forward. The judge also found that the SEC’s allegations of fraud were sufficient to proceed to trial.

The ruling caused some confusion in online cryptocurrency communities, with some misinterpreting it as a broader statement on the status of crypto mining devices as securities.

However, experts clarified that this case specifically deals with the alleged fraudulent scheme and does not have wider implications for legitimate cryptocurrency mining operations.

Neeraj Agrawal, director of communications at crypto lobbying group Coin Center, addressed the misunderstanding on social media, stating,

“This is wrong. Remain calm. This has no bearing on managed crypto mining. It’s garden variety ‘cloud mining’ scamming.”

The Green United case highlights the ongoing challenges faced by regulators in addressing fraud within the cryptocurrency industry.

As the sector continues to evolve, the SEC and other agencies are working to protect investors from scams that take advantage of the complex and often misunderstood nature of blockchain technology and digital assets.

The case will now move forward to trial, where the SEC will have the opportunity to present its evidence against Green United, Thurston, and Krohn. The outcome of this trial could have implications for how similar cases of alleged cryptocurrency fraud are handled in the future.