TechFlow reported on September 29, citing Decrypt, that a recent lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against cryptocurrency company Green United has drawn industry attention. The SEC accuses Green United of defrauding investors out of $18 million by selling mining equipment known as "Green Boxes." Last week, a federal judge rejected Green United's motion to dismiss the case, sparking speculation on social media that sales of crypto mining hardware could be classified as securities. However, several legal experts say there is currently no reason for excessive concern.
Ishmael Green, partner at Diaz Reus law firm, noted that selling mining equipment would not pose an issue as long as it is understood that end users will conduct the mining themselves. "In the Green United case, the problem lies in the sales agreement stating that Green United itself would control and operate the systems," he said. Hadas Jacobi, counsel at Reed Smith law firm, said although the SEC did not explicitly mention hosted mining, this case could still have implications for hosted mining services. Although Green United attempted to frame the case as the SEC misunderstanding hosted mining, the judge denied its motion to dismiss. Currently, the judge has only decided that the case may proceed, without making any ruling on the SEC's arguments.
Previous report, U.S. District Judge Ann Marie McIff Allen for the District of Utah stated: "The SEC has sufficiently alleged that the combination of Green Boxes (computer hardware) and hosting agreements to operate the Green Boxes constitutes a security."
