Two individuals who have been accused by the United States securities regulator of orchestrating an $18 million fraudulent cryptocurrency mining scheme are requesting the dismissal of the lawsuit. They are arguing in court that the agency lacks the authority to regulate cryptocurrency.
Wright Thurston and Kristoffer Krohn, on May 19, individually submitted motions to dismiss a lawsuit initiated by the Securities and Exchange Commission (SEC).
In March, the Securities and Exchange Commission (SEC) sued Wright Thurston, Kristoffer Krohn, and the alleged crypto mining and development company Green United LLC.
They were accused of engaging in fraudulent activities by unlawfully offering securities through the sale of “Green Boxes” and “Green nodes.” These products were marketed as miners for the GREEN token on the “Green Blockchain.”
Thurston and Krohn, in their defense against the lawsuit, contended that the SEC lacks jurisdiction over the digital asset ecosystem. They further asserted that Congress has previously examined and dismissed the SEC’s authority on cryptocurrencies.
Thurston and Krohn also argued that the SEC’s definition of cryptocurrencies has been unclear and inconsistent. They agreed with recent claims that the regulator was engaging in “regulation by enforcement,” implying that the SEC was establishing rules through its enforcement actions rather than clear guidelines or regulations.
Additionally, Thurston and Krohn argued that the SEC has failed to provide evidence establishing that the Green Boxes constituted securities offerings or “investment contracts,” as stated in the regulator’s initial complaint filed in March.
The SEC alleged in its March lawsuit that the hardware sold by Green United was, in fact, Bitcoin mining rigs. However, according to the SEC, these rigs did not fulfill their advertised purpose of mining GREEN tokens, and the purported blockchain associated with the project was found to be non-existent.
The SEC claimed that the fraudulent scheme raised approximately $18 million, and investors did not receive any of the Bitcoin (BTC) that Green United purportedly mined. SEC Chair Gary Gensler has consistently maintained the Commission’s authority over cryptocurrency, asserting that most crypto assets, excluding Bitcoin, qualify as securities based on the Howey test.
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