May 23, 2023 10:54 UTC
May 23, 2023 at 10:54 UTC
Defendants in a $18M fraud complaint contend that the SEC lacks jurisdiction over cryptocurrencies.
Two people are requesting that the SEC’s lawsuit against them be dismissed on the grounds that the agency lacks jurisdiction over cryptocurrency. They are accused of conducting a fraudulent crypto mining scheme.
Two people who have been charged by the US securities regulator with conducting a fraudulent $18 million cryptocurrency mining scam are requesting that the case be dismissed on the grounds that the agency lacks jurisdiction over cryptocurrencies.
Wright Thurston and Kristoffer Krohn each submitted a request to dismiss a Securities and Exchange Commission lawsuit on May 19.
The SEC filed a lawsuit against the two in March, together with the claimed cryptocurrency mining and development company Green United LLC, accusing them of deceptively marketing securities by selling “Green Boxes” and “Green nodes” that were promoted as miners for the GREEN token on the “Green Blockchain.”
Thurston started the business, and Krohn contractually promoted it.
Thurston and Krohn argued for the dismissal of the action by asserting that the SEC lacks jurisdiction over the ecosystem for digital assets and that Congress “considered and rejected” the SEC’s authority over cryptocurrencies.
They cited recent claims that the SEC was practising “regulation by enforcement,” saying the regulator had been “unclear and inconsistent” in defining cryptocurrency.
The SEC has decided to try to litigate its way to a coherent regulatory structure instead of attempting to propose legislation or make rules.
They also argued that the SEC had not proven that the Green Boxes were securities offerings or “investment contracts,” as the regulator had done in its March complaint.
The SEC asserted in its March lawsuit that the hardware sold by Green United was actually Bitcoin BTC tickers down $27,239 mining equipment that failed to mine GREEN as stated and that the alleged blockchain was a fabrication.
According to the regulator, the alleged fraud raised about $18 million, and investors “did not receive” any of the BTC that Green United mined.
Gary Gensler, the chair of the SEC, has long argued that the Commission has jurisdiction over cryptocurrencies and that, aside from Bitcoin, the majority of cryptocurrencies fall under the Howey test for securities.