A United States federal court has ruled in favor of the Securities and Exchange Commission (SEC), defining crypto mining devices as securities. The decision comes as part of the SEC’s lawsuit against Green United LLC, which it accuses of operating a Ponzi scheme. The SEC alleges that the company orchestrated a fraud involving the sale of crypto mining hardware.
Court Decision and Judge’s Opinion
US District Court Judge Ann Marie McIff Allen ruled that Green United’s mining devices, called “Green Boxes,” meet the legal definition of securities under US law. This ruling showed that the SEC had sufficiently proven the elements of an investment contract. The definition of a security here should not be viewed as simply stocks or tokens. The SEC also includes agreements on fields and the like within the scope of an investment contract, meaning that the acceptance of the security definition here should be considered in terms of “compliance with the investment contract.”
Green United’s Crime and Allegations
The SEC’s lawsuit against Green United LLC alleged that the company raised $18 million from investors. The company misrepresented the Green Boxes as a means to mine a non-existent digital token, GREEN, on the “Green Blockchain.” The court determined that the sale of these devices and the hosting agreement for operating the Green Boxes constituted an investment contract. Think of the classic “invest and get 10% monthly” Ponzi schemes, which are themed around crypto mining. Scammers have managed to lure people into their traps by taking advantage of the complexity of cryptocurrencies all over the world. Their stories of high profits in crypto have increased their credibility.
Green United’s Defense and Court Decision
Green United argued that its products were not securities, but the Judge rejected that argument, stating that the SEC had adequately described all the necessary elements of a security. This decision strengthened the SEC’s commitment to crypto asset regulation and consumer protection efforts.
The recent decision, which is a significant milestone in the legal status of cryptocurrencies and related hardware, may bring some problems. It remains to be seen what the court’s decision will have on the sale of devices defined as securities, future regulations, and legal practices.
In the new process, it is thought that other companies selling crypto mining devices may also face inspections and that regulatory bodies may increase their role in this area, but the decision does not directly open the door to this. If the companies that sell do not offer certain profit promises to buyers, but only sell devices and receive money in return, they will continue to do their business as before.
Disclaimer: The information contained in this article does not contain investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
