Green United Promoter Battles SEC in $18M Crypto Fraud Appeal

Kristoffer Krohn Appeals $18 Million Crypto Mining Fraud Case

In a notable legal development, Kristoffer Krohn, a promoter of Green United, is appealing a case concerning an $18 million crypto mining fraud scheme. This appeal comes in the wake of allegations by the Securities and Exchange Commission (SEC) regarding the improper sale of securities linked to mining equipment.

Krohn's Arguments Against the SEC

On October 24, Krohn made his case in a Utah federal court, urging the Tenth Circuit Appeals Court to reassess whether the buyers of Green United’s mining equipment constituted a "common enterprise." This clarification is pivotal, as the SEC's allegations stem from the argument that these transactions fell under the category of investment contracts governed by securities laws.

Krohn argued that it would be more efficient and just to resolve the legal issues at the appellate level rather than undergo the costs and time associated with litigation and trial.

Previous Court Rulings

Despite efforts to dismiss the SEC’s lawsuit, Utah district court judge Ann Marie McIff Allen previously ruled against Krohn, Green United, and founder Wright Thurston. The judge concluded that the SEC had sufficiently claimed that the company's so-called "Green Boxes" were offered as unregistered securities.

Understanding the Howey Test

Krohn's appeal centers on the assertion that the SEC misapplied the Howey test, which determines whether a transaction qualifies as a security. The SEC's allegations, which assert that Green United misled buyers by promoting the mining of the GREEN token on the "Green Blockchain," have been contested by Krohn. Instead, he claims that buyers received Bitcoin (BTC) mining rigs, steering away from the promised returns.

Arguments in Favor of Non-Security Sales

Krohn highlighted that the SEC failed to argue that purchasers of the Green Boxes had any claim on the profits of Green United’s operations. This absence of a profit-sharing invitation suggests that the sale was simply for computer hardware rather than an investment opportunity.

Moreover, he pointed out the lack of established law within the Tenth Circuit concerning what constitutes an investment contract in the cryptocurrency field, indicating that reasonable judgments could vary in this developing technological landscape.

The Path Forward

If Krohn’s appeal is successful, he may present his case before a three-judge panel, a process that could extend for several months before a final decision is rendered. Previously, in dismissal motions filed in May, Krohn and Thurston contended that the SEC should not exert authority over cryptocurrency, citing that Congress had previously considered and rejected such oversight.

Conclusion

This ongoing legal dispute underscores the complex intersection of law and cryptocurrency, particularly as regulatory bodies like the SEC navigate the challenges posed by rapidly evolving technologies. The outcome of Krohn’s appeal may set significant precedents for future cryptocurrency litigation.

For more insights on cryptocurrency regulations, visit our article on Crypto Regulations Update.

To understand the implications of the Howey test better, check out this Investopedia guide.