Green United LLC has lost its bid to dismiss a lawsuit from the United States Securities and Exchange Commission, which has accused its executives of operating a fraudulent crypto mining scheme that raked in $18 million from investors.
Defendants Wright Thurston and Kristoffer Krohn â who operated cryptocurrency mining firm Green United LLC â were accused by the SEC of fraudulently offering securities in March after selling âGreen Boxesâ and âGreen nodesâ marketed as miners for the GREEN token on the âGreen Blockchain.â
In the Sept. 23 decision, Judge Ann Marie McIff Allen said the defendants failed to rebut the SECâs securities allegations, stating that the âSEC has adequately alleged all necessary elements of a security in the form of an investment contract.â
Judge Allen declined to dismiss the SECâs fraud claims against Thurston, claiming his actions created the âillusionâ that investors were earning GREEN tokens through mining.
âIn reality, they received GREEN only according to Mr. Thurstonâs whim to distribute it to investors, allegedly on the basis of how many Green Boxes they owned.â
â[This] constitutes a deceptive act in furtherance of the Green Box fraud.â
An excerpt from the defendantsâ motion to dismiss. Source: PACER
The SEC also alleged that the hardware sold by Green United were actually Bitcoin (BTC) mining rigs that didnât mine GREEN as advertised, and the purported blockchain never existed.
The alleged scheme raised approximately $18 million, and investors âdid not receiveâ any Bitcoin mined by Green United, the SEC said.
In its motion to dismiss, Thurston and Krohn also claimed that the SEC had no authority over digital assets as Congress already âconsidered and rejectedâ its authority and that such enforcements violate the Due Process clause and separation of powers as laid out in the US Constitution.
However, Judge Allen also knocked back this argument:
âThis action does not present any novel attempt at regulation by the SEC. Rather, the SEC, by this action, pursues the regulatory goals Congress set for it ninety years ago.â
The SECâs lawsuit will now move on to the next part in the legal process, typically the discovery or trial stage.
Thurston and Krohn filed motions to dismiss the SECâs lawsuit on May 19.
Green United was founded by Thurston in Utah from April 2018 until at least December 2022, while Krohn contractually promoted the scheme.
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