In a significant development in the ongoing battle against cryptocurrency fraud, a federal judge in Utah has dismissed an appeal by Kristoffer Krohn. Krohn, a prominent figure linked to an $18 million cryptocurrency fraud involving Green United LLC, faced a setback on November 26. Judge Ann Marie McIff Allen ruled against Krohn’s appeal, supporting her previous decision to allow the U.S. Securities and Exchange Commission (SEC) to pursue its legal action against him.
Allegations Against Green United LLC
The SEC has leveled serious accusations against Green United LLC, alleging that the company orchestrated a fraudulent scheme spanning from April 2018 to December 2022. At the heart of this scheme were so-called “Green Boxes” and “Green Nodes,” marketed as integral components of a supposed “Green Blockchain.” Investors were enticed with promises of returns linked to a cryptocurrency known as GREEN tokens. However, the SEC contends that both the blockchain and the tokens were fabricated post-sale, rendering the entire operation deceptive and predatory.
Krohn’s Defense Falls Flat
In his defense, Krohn argued that the SEC had failed to demonstrate that the sales of these devices and tokens met the criteria for securities under the Howey Test—a legal standard used to determine the existence of an investment contract. Judge Allen, however, dismissed this argument, asserting that Krohn had misinterpreted the law. She upheld the SEC’s stance, affirming that the transactions did indeed qualify as investment contracts, thereby subjecting them to securities regulations.
Co-Defendant Wright Thurston’s Motion
In a parallel legal maneuver, Wright Thurston, the founder of Green United LLC, has filed a motion to dismiss the charges against him. Nonetheless, the SEC is resolutely opposing this motion, maintaining that the creation of the Green Blockchain and GREEN tokens occurred post-sale, leaving investors with assets devoid of value. This ongoing legal wrangling highlights the complexities of the case and the staunch stance taken by the SEC.
Regulatory Focus on Crypto Fraud
This case serves as a stark reminder of the increased regulatory attention being directed towards fraud within the cryptocurrency sector. It stands as a cautionary tale for investors in unregulated securities, emphasizing the potential risks of engaging with schemes disguised as blockchain innovations. Amidst the continuing legal battle, the SEC’s determination to address fraudulent activities illustrates its unwavering commitment to safeguarding investors and promoting transparency within the rapidly evolving crypto industry.
