SEC accuses Utah firm of $18 million crypto mining “fraud”

Crypto mining software and equipment offered by Utah-based Green United LLC was part of an $18 million “fraud scheme” that never mined the crypto it said it would, according to allegations by the United States Securities and Exchange Commission (SEC).

The regulator filed a complaint in a Utah district court on March 3 against Green United, founder Wright Thurston and a contracted promoter Kristoffer Krohn.

It alleges that the company and the two representatives fraudulently offered securities between April 2018 and December 2022 by selling investments in $3,000 “Green Boxes” and “Green nodes” that purported to mine the GREEN token on the “Green Blockchain.”

Investors were reportedly told that the firm would develop the Green Blockchain to create a “public global decentralized power grid” and the GREEN token would increase in value based on the stake with a return of up to 50% a month.

However, the SEC claimed that the hardware sold did not mine GREEN, as it was an Ethereum-based ERC-20 token that could not be mined and the Green Blockchain did not exist.

It added that the GREEN token was created “several months” after the initial hardware sale to investors and was periodically distributed to “create the appearance of a successful mining operation.”

Instead, the real scheme, according to the SEC, used the funds to buy S9 Antminers – Bitcoin (BTC) mining rigs – which were given out as the green “boxes” and “nodes” to investors. The firm mined Bitcoin, not GREEN tokens, which investors “did not receive.”

Is the SEC going after mining?

Meanwhile, the crypto community on Twitter has been given an interpretation of the SEC complaint, suggesting that the SEC is going after crypto miners and arguing that selling miners or providing hosting for them is a securities investment contract.

The roof come from a March 6 tweet from the pseudonymous attorney “MetaLawMan.”

However, crypto lawyer and investment advisor Timothy Peterson argued that the interpretation was a “bad take” and added that the case did not “target mining in general.”

“The SEC is not saying ‘all mining equipment sales are now a security,'” Peterson said.

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Another crypto commentator, Dennis Porter, CEO of the Bitcoin advocacy group Satoshi Action Fund, tweeted that “SEC is not coming after mining” and it “didn’t classify hosting as a security” and said Green United’s operation was “a scam disguised” as mining .”

The SEC has requested a court order requiring Thurston, Krohn and Green United to cease operations, seek civil penalties for violations of the Securities Act and repay the $18 million in allegedly ill-gotten gains.