The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against a Utah-based digital asset project that allegedly defrauded $18 million from investors. Known as Green United LLC, the company raised money to purchase mining machines for its GREEN tokens, but it invested in BTC ASIC mining rigs instead.
Green United launched in April 2018 and raised funds until December 2022, the lawsuit, filed at the Northern Division of the Utah District Court, alleges.
Led by its founders Kristoffer Krohn and Wright Thurston, the company raised funds by selling ‘Green Boxes’ and ‘Green Nodes,’ which it claimed mined GREEN tokens. The founders would maintain the machines and distribute the mined tokens to the investors, they claimed.
The founders claimed they were developing the Green Blockchain to become “a public global decentralized power grid,” telling the investors that the value of the native GREEN token will rise based on their efforts with the network.
In reality, the two founders never purchased any GREEN mining devices—the token was created several months after the fundraising. The founders distributed a chunk of the premined tokens periodically to create the illusion of mining.
The Green team channeled the funds to purchasing S9 Antminers to mine BTC. The BTC they mined was never distributed to the investors.
The SEC accuses the Green team of selling investment contracts through the Green Nodes and Boxes. Investors pooled their money; in a common enterprise; and expected profits from the efforts of others—the three prongs of the Howey test.
The Commission seeks a permanent injunction for the defendants, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties.
Krohn is no stranger to SEC’s enforcement actions. A decade ago, the agency obtained injunctive relief against him for violating securities laws through a real estate investment program.
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