Green United LLC has lost its bid to dismiss a lawsuit filed by the United States Securities and Exchange Commission (SEC), which accuses the company’s executives of orchestrating a fraudulent cryptocurrency mining scheme that allegedly defrauded investors of $18 million.
The SEC’s lawsuit targets defendants Wright Thurston and Kristoffer Krohn, who operated Green United LLC. The agency claims they fraudulently offered securities by selling “Green Boxes” and “Green Nodes,” which were marketed as mining devices for the GREEN token on the nonexistent “Green Blockchain.”
In a ruling on September 23, Judge Ann Marie McIff Allen stated that the defendants failed to effectively counter the SEC’s allegations, confirming that the SEC had sufficiently established all necessary elements of a security, particularly in the form of an investment contract.
Judge Allen also dismissed attempts to dismiss the SEC’s fraud claims against Thurston, noting that his actions created a misleading impression that investors were earning GREEN tokens through mining. Instead, it was revealed that token distribution was at Thurston’s discretion, based on the number of Green Boxes owned by investors.
The ruling indicated that this practice constituted a deceptive act furthering the alleged Green Box fraud. Furthermore, the SEC claimed that the hardware sold by Green United were actually Bitcoin mining rigs and did not mine the GREEN token as advertised. The purported blockchain associated with the scheme was said to be nonexistent.
In their motion to dismiss, Thurston and Krohn contended that the SEC lacked authority over digital assets, arguing that Congress had previously “considered and rejected” such authority. They also claimed that the enforcement actions violated the Due Process clause and the principle of separation of powers as established in the U.S. Constitution. However, Judge Allen dismissed this argument, clarifying that the SEC’s actions were aligned with regulatory goals set forth by Congress nearly a century ago.
With the dismissal of their motion, the SEC’s lawsuit against Green United will proceed to the next phase, typically involving discovery or trial. Thurston and Krohn initially filed their motion to dismiss on May 19.
Green United was founded by Thurston in Utah and operated from April 2018 until at least December 2022, while Krohn played a role in promoting the scheme. As the case moves forward, the implications for both the defendants and the broader cryptocurrency landscape remain significant.
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