The U.S. Securities and Exchange Commission (SEC) has alleged that a Utah-based company violated federal securities laws by selling crypto mining equipment tied to a blockchain that never existed.
In a complaint filed on Friday, the SEC named Green United, its founder Wright Thurston and promoter Kristoffer Krohn in a lawsuit. The regulator charged them with a fraudulent securities offering tied to the “Green blockchain.”
Between April 2018 and December 2022, the defendants allegedly raised $18 million through the sale of Green Boxes and Green Nodes. They promised investors that these purchases would result in the mining of a GREEN token, which in reality was never really mineable seeing as it is an ERC-20 token created on the Ethereum blockchain.
At the time of the offering, the Green Boxes were described as crypto asset mining machines which would mine GREEN on a “public, global and decentralized blockchain.” It was marketed as a token that was mined based on calculating how much energy was used in mining other crypto assets.
It turns out, these Green Boxes were actually S9 Antminers, commonly used Bitcoin mining hardware. Green United ended up mining BTC and never actually sending it to investors.
Despite promises to make GREEN available on centralized exchanges, it never ended up trading on a secondary market, rendering the tokens worthless. The company, however, raised a total of $5.4 million, of which $900,000 was paid in Bitcoin.
Green United then abandoned its Green Box offering in 2019, instead offering Green Nodes, which the firm claimed would mine green through a downloadable specialized software. According to the SEC, investors collectively ended up paying $2 million worth of ETH, which were pooled into a wallet controlled by Thurston.
The SEC is seeking permanent injunctions against Green United, Thurston and Krohn, ordering them to disgorge ill-gotten gains and pay civil penalties.