According to Cointelegraph, the promoter of Green United, Kristoffer Krohn, is seeking to appeal his case in an $18 million crypto mining fraud scheme. Krohn argues that the Securities and Exchange Commission (SEC) should drop the suit, claiming the SEC's argument that he allegedly sold securities is incorrect.
Krohn presented his case to a Utah federal court on October 24, stating that the Tenth Circuit Appeals Court should determine if buyers of the firm’s equipment were part of a “common enterprise.” This determination is crucial as the SEC used this argument to allege that the company sold investment contracts under securities laws. Krohn emphasized that resolving this legal issue at the appellate level would be more efficient and just, rather than bearing the costs of litigation and trial first.
Last month, Utah district court judge Ann Marie McIff Allen rejected a bid to dismiss the SEC’s lawsuit from Krohn, Green United, and its founder Wright Thurston. The judge stated that the SEC had “adequately alleged” that the firm’s “Green Boxes” were sold as unregistered securities. Krohn’s appeal bid highlights that the SEC’s application of the Howey test, a legal test to determine if a transaction is a security, was incorrect.
The SEC has filed lawsuits against multiple crypto firms in the US, accusing them of selling unregistered securities under the Howey test. In March 2023, the regulator sued Green United, Thurston, and Krohn, alleging they misled “Green Box” buyers by claiming it would mine the GREEN token on the “Green Blockchain.” Instead, the buyers received rigs to mine Bitcoin (BTC), which investors did not receive.
Krohn argued in his appeal that the SEC did not and could not allege that Green Box purchasers had any right or stake in the profits of Green United’s business operations. He asserted that the fact that Green Box purchasers were not offered the opportunity to share in Green United’s profits indicates that he was merely selling high-powered computer hardware, not a security. Krohn also noted that the Tenth Circuit has yet to develop a “clear, binding law” regarding what constitutes an investment contract in the context of cryptocurrency.
Krohn contended that while the order concluded that the SEC adequately alleged the existence of an investment contract under the facts presented in the amended complaint, reasonable judges might differ given the nascent stage of the technology involved in this case. If successful, Krohn would be allowed to argue his case before a three-judge appeals panel, a process that could take months before a final decision is reached.
Krohn and Thurston had previously argued in dismissal motions last May that the SEC had no authority over cryptocurrency, claiming Congress “considered and rejected” the SEC’s authority over the space.
