Defendants in an $18 million fraud complaint claim the SEC has no jurisdiction over crypto
Two persons have asked a court to dismiss an SEC lawsuit against them because they were accused of operating a fraudulent cryptocurrency mining business.
Two defendants in a lawsuit filed by the United States securities regulator alleging they ran a fraudulent $18 million cryptocurrency mining operation are attempting to have the case dismissed on the grounds that the agency has no jurisdiction over cryptocurrencies.
Separate requests to dismiss a case brought by the SEC were submitted by Wright Thurston and Kristoffer Krohn on May 19th.
The SEC filed a lawsuit against the two people in March, alleging that they falsely offered securities by selling “Green Boxes” and “Green nodes” that were advertised as miners for the GREEN token on the “Green Blockchain.”
Thurston established the firm, and Krohn agreed to help market it in exchange for a commission. Thurston and Krohn argued that the SEC lacks jurisdiction over the cryptocurrency market since Congress “considered and rejected” the SEC’s power over cryptocurrencies.
And they reiterated previous claims that the agency is engaging in “regulation by enforcement,” saying the SEC has been “unclear and inconsistent” in its definition of cryptocurrency.
The two also argued that the SEC had failed to prove that the Green Boxes were securities offers or “investment contracts,” as the agency was claiming in its March lawsuit.
The SEC filed a lawsuit against Green United in March, alleging that the gear was really Bitcoin mining rigs that did not mine GREEN as described and that the supposed blockchain did not exist.
The agency claims that about $18 million was collected via the scam and that investors “did not receive” any of the Bitcoins created by Green United.
SEC Chair Gary Gensler has long defended the Commission’s jurisdiction over cryptocurrencies, arguing that all cryptocurrencies save Bitcoin fail the Howey test and are thus securities.