Utah Firm Accused of Fraudulent Mining, Is SEC Against Crypto Mining?

Weeks later than expected decomposition on the crypto industry, the US Securities and Exchange Commission (SEC) still hitting the headlines. On March 3, the regulator filed a complaint against a Utah firm over an allegedly fraudulent crypto-mining operation.

This has raised eyebrows and speculation among the crypto community as to whether the SEC is now against crypto mining and has begun targeting that particular aspect of the industry.

SEC accuses Utah firm of fraud

The Utah-based firm called Green United’s operation was accused by SEC for allegedly launching an “$18 million fraud scheme” by tricking investors into mining crypto, which it actually did not, according to the SEC complaint filed.

The regulator didn’t just file complain against the fraudulent company Green United LLC, but also against its founder Wright Thurston and contract organizer Kristoffer Krohn. According to the complaint, both of the two executives used the company to offer fake securities for nearly five years.

Thurston and Krohn used the company to sell fraudulent investment schemes of $3,000 “Green Boxes” and “Green nodes” between April 2018 and December 2022. Both products were said to be for the purpose of mining GREEN tokens on the “Green Blockchain”.

These services were all a scam as both the two representatives were only making it up to scam investors out of their funds. The Utah-based firm reportedly told investors that its goal was to develop Green Blockchain that will be used to create a “public global decentralized power grid.”

The Green United company promised investors an increase in the value of the mined GREEN tokens and 50% return in profit per month if they invest in it. According to the SEC complaint, Green United did not mine any GREEN token with the hardware sold, as the token was Ethereum-based (ERC20) and could not be mined.

The SEC claimed Green Blockchain never existed and the GREEN token was created several months after the firm made its first hardware sale to investors. The regulator added that it was deployed every now and then to “create the appearance of a successful mining operation.”

The SEC further added that instead of providing the promised services, the firm used the ill-gotten funds to purchase other Bitcoin mining equipment that was eventually presented to the investors as the green boxes and nodes. To conclude, the SEC noted that Green United never mined the GREEN tokens, but instead mined Bitcoin.

Furthermore, as a penalty, the SEC urged the court to require Green United, Thurston and Krohn to cease operations and seek civil penalties for violations of securities laws as well as pay back the $18 million they received from their fraudulent schemes.

SEC Targeting Crypto Mining Next?

Over the past month, the SEC has shown itself to be concerned about crypto regulation, and as the regulator has clamped down on a firm or sector of the industry, the crypto community is always looking towards where the regulator will be targeting next.

The latest move against the Utah-based mining company has sparked speculation in the community as some have begun to fear that the regulator may want to crack down on the crypto mining sector next.

A self-proclaimed lawyer with the Twitter pseudonym “MetaLawMan” first raised the speculation claim that the SEC alleged, “Selling crypto-mining equipment and providing hosting services for the equipment constitutes an ‘investment contract’ under Howey.”

MetaLawMan claims led to some comments from experts who tried to dissuade the rest of the crypto community. Investment advisor and crypto advocate Timothy Peterson commented on MetaLawMan said his post was a “bad take” and that the SEC is not specifically targeting crypto “mining in general.”

CEO and co-founder of Satoshi Act Fund as well opposed MetaLawMan’s post calling it “FUD [fear uncertainty and doubt]” and argues that “the SEC is not coming after mining.”

Meanwhile, the crypto market is still in a bearish trend after several negative news reported in the last week. The global crypto market capitalization has fallen from $1.1 trillion at the end of last month to $1.069 as of March 7.

Featured image from UnSplah, chart from TradingView.