Utah Judge Rejects Appeal in $18M Crypto Fraud Case Against Promoter

The post Utah Judge Rejects Appeal in $18M Crypto Fraud Case Against Promoter appeared first on Coinpedia Fintech News

A federal judge in Utah has dismissed an appeal by Kristoffer Krohn, a promoter implicated in an $18 million cryptocurrency fraud involving Green United LLC. On November 26, Judge Ann Marie McIff Allen ruled there was no substantive basis for Krohn’s appeal against her earlier decision to allow the U.S. Securities and Exchange Commission (SEC) to proceed with its legal action.

Allegations Against Green United LLC

The SEC has accused Green United LLC of orchestrating a fraudulent scheme from April 2018 to December 2022. The company allegedly sold “Green Boxes” and “Green Nodes,” which were marketed as tools tied to a purported “Green Blockchain.” Investors were led to believe these devices would generate returns linked to a non-existent cryptocurrency called GREEN tokens.

According to the SEC, the blockchain and tokens were fabricated after the devices were sold, making the entire operation deceptive and predatory.

Krohn’s Defense Falls Flat

Krohn’s defense argued that the SEC failed to establish that the sales met the definition of securities under the Howey Test—a standard used to determine whether a transaction qualifies as an investment contract. However, Judge Allen rejected this argument, stating that Krohn misinterpreted the law.

The court sided with the SEC, affirming that the sale of the devices and tokens constituted investment contracts, thereby falling under securities regulations.

Co-Defendant Wright Thurston’s Motion

Wright Thurston, the founder of Green United LLC, has also filed a motion to dismiss the case. The SEC, however, is pushing back, maintaining that the company fraudulently created the Green Blockchain and GREEN tokens after their sale, leaving investors with worthless assets.

Regulatory Focus on Crypto Fraud

This case underscores increasing regulatory scrutiny of fraud within the cryptocurrency sector. It serves as a warning for investors in unregulated securities, highlighting the risks of falling victim to schemes operating under the guise of blockchain innovation.

As the legal battle continues, the SEC’s persistence in addressing such fraudulent activities signals its commitment to protecting investors and maintaining transparency in the evolving crypto industry.