A federal court ruled Green United’s crypto mining devices are securities, supporting the SEC’s fraud allegations.
The SEC claims Green United misled investors, as their mining devices did not mine tokens but distributed worthless ones.
The court sided with the SEC, applying the Howey test to classify Green United’s Green Boxes and hosting agreements as securities.
The SEC scored the biggest court victory over Green United LLC, with a federal court ruling that the firm's cryptocurrency mining devices, otherwise known as Green Boxes, were securities.
https://twitter.com/BSCNheadlines/status/1838987571180748871
The U.S. Court for the District of Utah, presided over by Judge Ann Marie McIff Allen, ruled in favor of fraud allegations filed by the agency against Green United.
SEC Alleges Fraud in Green United’s Operations
The agency filed a complaint against Green United, alleging the firm had lied to investors about how much profit they'd make with its Green Boxes. According to the complaint, Green United claimed the devices were designed to mine digital tokens. However, the agency argued that no mining ever occurred.
What occurred was that Green United issued unmined tokens, called GREEN, with no value whatsoever in any secondary market.
Judge Sides on Securities Classification
Judge Ann Marie McIff Allen ruled against them, accepting the complainant's argument. She found the Green Boxes and hosting agreements collectively constituted a security under the Howey test.
The SEC made good on its burden of showing that investors were promised high-yield returns, an inducement to invest, and thus an investment contract. The SEC win comes as the agency faces scrutiny by the Congress over its regulation policies.
Green United's Defense Against SEC Claims
In response, Green United claimed that no investors had actually lost money. IN addition, they argued that the SEC was wrong in labeling hosted mining as a security. The firm also claimed that hosted mining was quite common among publicly traded companies. The court, however, rejected all such claims by Green United to dismiss the case.
By the court's ruling in favor of the SEC, it means Green United is still facing some legal problems concerning its alleged fraudulent acts. Such decisions highlight the SEC's closer scrutiny of cryptocurrency companies. They aim to ensure compliance with securities laws.
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