In a significant legal victory for the Securities and Exchange Commission (SEC), a federal court has ruled that cryptocurrency mining “boxes” offered by Green United LLC are securities. The decision comes in response to a lawsuit filed by the SEC alleging civil fraud against the company.
Green United, which had argued that its customers were not involved in securities transactions, failed to convince the court of its position. Judge Ann Marie McIff Allen found that the SEC had adequately alleged an investment contract involving the Green Boxes and the accompanying hosting agreement.
The SEC’s lawsuit against Green United revolves around claims that the company defrauded investors by selling mining hardware as part of a larger scheme. The SEC alleges that Green United marketed the Green Boxes to customers with promises of significant returns from cryptocurrency mining. The court ruled that the SEC had adequately alleged that these transactions meet the criteria for an investment contract, as defined by the U.S. Supreme Court’s Howey test.
The SEC’s case against Green United is ongoing, and it remains to be seen what the ultimate outcome will be.
