Legal Expert: SEC v. Green United Case Targeting Specific Fraudulent Practices, Does Not Affect Sales of Crypto Mining Hardware

On September 29th, according to Decrypt, the lawsuit filed by the US Securities and Exchange Commission (SEC) against the cryptocurrency company Green United has recently attracted industry attention. The SEC accuses Green United of defrauding investors of $18 million by selling so-called "Green Boxes" mining equipment. Last week, a federal judge rejected Green United's dismissal request, sparking speculation on social media that sales of cryptocurrency mining hardware may be considered securities. However, multiple legal experts have stated that there is currently no reason to be overly concerned. Ismail Green, a partner at Diaz Reus law firm, pointed out that as long as mining equipment is sold with the understanding that mining is carried out by end-users, there will be no problem. In the Green United case, the sales agreement for the mining equipment stated that Green United would control and operate the system, which is where the problem lies, "said Hadas Jacobi, a consultant at Reed Smith law firm. Although the SEC did not explicitly mention custodial mining, this may have an impact on custodial mining services. Although Green United attempted to describe the case as a misunderstanding by the SEC regarding custodial mining, the judge refused its request to withdraw the case. At present, the judge has only decided to hear this case and has not made a ruling on the SEC's arguments. BlockBeats previously reported that on September 26th, according to Bloomberg Legal News, Judge Ann Marie McKee Allen of the United States District Court for Utah stated that "the Securities and Exchange Commission (SEC) has fully charged Green Boxes (computer hardware) with constituting securities in combination with custody agreements to operate Green Boxes." This investigation is different from whether digital assets themselves and their transactions meet the US Supreme Court's test of investment contracts. Green United LLC was unable to convince the federal court to dismiss the civil fraud lawsuit filed by the SEC against it, citing that its cryptocurrency mining machine "Boxes" or hardware customers did not engage in securities trading with it.