Two people accused by US securities regulators of running an $18 million cryptocurrency mining fraud scheme are seeking to have their lawsuit dismissed, arguing in court that the agency has no authority over cryptocurrencies.
On May 19, Wright Thurston and Kristoffer Krohn each filed motions to dismiss with the SEC.
The duo, along with so-called crypto mining and development firm Green United LLC, were instructed by the SEC in March accused of working on a “green blockchain.” The company was founded by Thurston and signed on by Krohn to promote it. In their arguments for dismissing the lawsuit, Thurston and Crohn asserted that the SEC has no authority over the digital asset ecosystem, adding that Congress “considered and rejected” the SEC's authority over cryptocurrencies.
They added that the SEC has been “unclear and inconsistent” in defining cryptocurrencies, echoing recent suggestions that regulators are “regulating through enforcement,” adding: “The SEC has abandoned any efforts at proposed legislation or rulemaking, opting instead to att empty to create a coherent regulatory plan through litigation." Among other arguments in dismissing the case, the pair claimed the SEC did not certify that the green boxes were securities offerings, or "investment contracts," as the regulator claimed in its March complaint.
In a March lawsuit, the SEC claimed that the hardware sold by Green United was actually Bitcoin, there are no mining rigs that mine green as advertised, and the so-called blockchain never existed. According to the regulator, the alleged scheme raised about $18 million and investors “did not receive” any of the bitcoins mined by Green United. SEC Chairman Gary Gensler has long asserted the commission's authority over cryptocurrencies, saying that most crypto assets without bitcoin are securities under the Howey test.
