Green United LLC is facing a lawsuit from the U.S. Securities and Exchange Commission (SEC) for allegedly operating a fraudulent crypto-mining scheme that defrauded investors of $18 million.

The SEC claims that Green United misled investors by failing to mine the promised digital tokens, instead purchasing unmined tokens to create the illusion of a successful operation.

The defendants, Wright Thurston and Kristoffer Krohn, are accused of selling non-existent crypto-mining equipment marketed as 'Green Boxes' and 'Green nodes' for a fraudulent 'Green Blockchain'.

Investors reportedly paid $3,000 for these Green Boxes, lured by promises of significant returns, which further supports the SEC's claims of a common enterprise.

The SEC alleged that the mining hardware sold was actually Bitcoin mining rigs that did not mine the advertised GREEN tokens, and the supposed blockchain was non-existent.

Moreover, Green United's currency, GREEN, reportedly had no real market value as it was not traded on any secondary market.

On September 23, a federal court ruled that the SEC had sufficiently established the elements of a security in the form of an investment contract, denying Green United's motion to dismiss the case.

This ruling affirmed the SEC's classification of crypto mining boxes as securities, a significant development in the ongoing regulatory scrutiny of the cryptocurrency sector.

Judge Ann Marie McIff Allen emphasized that the Green Boxes, along with a hosting agreement, constituted a security, rejecting the company's defense.

The SEC's lawsuit is part of a broader trend of enforcement actions against alleged fraud in the cryptocurrency sector, highlighting the agency's commitment to protecting investors.

Green United contested the security designation but was unsuccessful, arguing that the SEC's suit lacked specific allegations of victimization or financial loss among investors.

As the lawsuit progresses to the next legal stage, typically involving discovery or trial, the implications for the cryptocurrency industry remain significant.