The U.S. Securities and Exchange Commission (SEC) has won a landmark ruling as a federal court in the District of Utah agreed with its argument that the “Green Boxes” cryptocurrency miners sold by Green United LLC, combined with storage agreements, constitute securities under the law. This means that the SEC’s civil fraud lawsuit against Green United will continue.
The SEC alleges that Green United defrauded investors by selling “Green Boxes” with hosting and operating services, promising huge returns. However, the SEC alleges that Green United did not use the machines to mine, but instead purchased unmined tokens and deposited them into investor accounts to create the appearance of a successful mining operation. The mined tokens, called “GREEN,” allegedly had no real value and were not traded on any secondary market.
Green United has denied the allegations, insisting that no investors lost money and arguing that the SEC is trying to impose securities regulations on storage mining, which is common even among public companies. They argue that the SEC is misinterpreting the law by using the Howey test — a legal standard that determines whether an investment is a security based on whether the investor expects to profit from the efforts of others.
The case marks a major step forward in the SEC’s efforts to regulate the cryptocurrency market and prevent fraudulent activities in the name of cryptocurrencies. With the verdict, the SEC has recovered $18 million from Green United, the amount the company allegedly collected from investors. The case is still under investigation and trial.
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