Kristoffer Krohn contends that the Securities and Exchange Commission (SEC) applied securities laws incorrectly, and he is requesting that an appeals court determine who is correct.
The promotor of Green United, who is accused of participating in a $18 million crypto mining fraud, is currently attempting to appeal his case. He contends that the United States Securities and Exchange Commission should be compelled to dismiss the lawsuit due to the inaccuracy of its claim that he sold securities.
On October 24, Kristoffer Krohn stated in a Utah federal court that the Tenth Circuit Appeals Court should determine whether purchasing the firm’s equipment constitutes membership in a “common enterprise.” The SEC employed this term to accuse the company of selling investment contracts in violation of securities laws.
In his interlocutory appeal, Krohn argued that it would be more expedient and in the best interest of justice to have the Tenth Circuit address this legal issue immediately, rather than requiring him to first incur the costs of litigation and trial.
In the previous month, Utah District Court Judge Ann Marie McIff Allen dismissed Krohn, Green United, and its founder Wright Thurston’s attempt to dismiss the SEC’s lawsuit. She ruled that the SEC had “adequately alleged” that the firm’s “Green Boxes” were sold as unregistered securities.
The SEC has initiated proceedings against numerous crypto firms in the United States, alleging that they are selling unregistered securities in violation of the Howey test, a legal process that determines whether a transaction is a security.
In March 2023, the regulator filed a lawsuit against Green United, Thurston, and Krohn. The lawsuit alleged that the trio misled “Green Box” purchasers by claiming that they would mine the GREEN token on the “Green Blockchain.” However, the regulator argued that the GREEN token did not exist and that the trio instead purchased devices to mine Bitcoin, which investors did not receive.
Krohn stated in his appeal petition that the SEC did not, and cannot, allege that Green Box purchasers had any right or interest in the profits of Green United’s business operations.
“The absence of an opportunity for Green Box purchasers to participate in Green United’s profits serves as evidence that Krohn was merely selling high-performance computer hardware, rather than a security.”
Krohn argued that the embryonic stage of the technology involved in the instant case might lead to reasonable judges differing from the order’s conclusion that the SEC adequately alleged the existence of an investment contract based on the facts pled in the amended complaint.
Krohn would be permitted to present his case to a three-judge appeals panel if he is successful, a procedure that could require several months before a final decision is rendered.
In dismissal petitions filed last May, Krohn and Thurston contended that the SEC lacked authority over cryptocurrency, alleging that Congress had “considered and rejected” the SEC’s authority in the field.
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