Utah Firm Accused Of Fraudulent Mining Scheme, Is SEC Against Crypto Mining?

Weeks later after its supposed crackdown on the crypto industry, the U.S. Securities and Exchange Commission (SEC) is still making it into the headlines. On March 3, the regulator filed a complaint against a Utah firm over an allegedly fraudulent crypto mining scheme.

This has raised eyebrows and speculations among the crypto community on whether the SEC is now against crypto mining and has begun to target that particular aspect of the industry. 

SEC Accuses Utah Firm Of Fraud

The Utah-based firm called Green United’s operation was accused by the SEC of allegedly initiating an “$18 million fraudulent scheme” by deceiving investors of mining crypto which it actually didn’t, according to the filed complaint by the SEC. 

The regulator did not only file the complaint against the fraudulent firm Green United LLC but also against its founder Wright Thurston and Contract Promoter Kristoffer Krohn. According to the complaint, both of the two executives used the company to offer fraudulent 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 hoax as both the two representatives only made that up to scam investors of their funds. The Utah-based firm allegedly told investors its aim was to develop the Green Blockchain which 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 a 50% return in profit per month if they invest in it. Per 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 the Green Blockchain never even existed and the GREEN token was created several months after the firm made its first hardware sales to investors. The regulator added that it was distributed every now and then to “create the appearance of a successful mining operation.”

The SEC further added that instead of offering the promised services, the firm used the ill-gotten funds to buy other Bitcoin mining equipment which was eventually portrayed to the investors to be the Green boxes and nodes. To conclude, the SEC noted Green United never mined the GREEN tokens but instead mined Bitcoin. 

Furthermore, as a punishment, the SEC urged the court to require Green United, Thurston, and Krohn to stop operating and seek civil penalties for securities law violations as well as pay back the $18 million gotten from their fraudulent scheme.

SEC Targeting Crypto Mining Next?

Over the past month, the SEC has proved to be keen on crypto regulation, and as the regulator has clamped down on a firm or a sector in the industry, the crypto community is always looking toward where the regulator will be targeting next. 

Its latest move against the Utah-based mining company has sparked speculation among the community as some have begun to fear the regulator could want to prey on the crypto mining sector next. 

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

MetaLawMan claims brought about some comments from experts trying to pipe down the rest of the crypto community. Investment adviser and crypto advocate Timothy Peterson commented on MetaLawMan saying 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 also opposed MetaLawMan’s post terming it “FUD [fear uncertainty and doubt]” and arguing that “the SEC is not coming after mining.” 

Meanwhile, the crypto market is still in a bearish trend following several negative news reported over the past week. The global crypto market cap has fallen from $1.1 trillion seen late last month to $1.069 as of March 7.

Featured image from UnSplah, Chart from TradingView.