In a decision that could shake up the crypto mining industry, the Securities and Exchange Commission (SEC) has just scored a decisive point. A federal court has upheld the agency's position that certain mining devices can be considered securities.
A redefinition of the legal status of crypto mining
The SEC is stepping up its oversight of the crypto sector by expanding its definition of securities. In a recent lawsuit against Green United LLC, the agency argued that mining equipment, coupled with hosting agreements, constitutes investment contracts.
This interpretation is based on the Howey test, established by the Supreme Court in 1946, which defines an investment contract as an investment of money in a joint enterprise with the hope of profits arising solely from the efforts of a third party. .
According to the SEC, “ Green Boxes » sold by Green United, coupled with the promise of company-generated returns, fulfill these criteria.
Utah District Court Judge Ann Marie McIff Allen validated that position by denying Green United's request to dismiss the case. She found that the SEC had “ sufficiently alleged security in the form of Green Boxes coupled with a Hosting agreement“.
Major implications for the mining industry
This classification of mining equipment as securities represents a significant development in the SEC's regulatory approach. Until now, the debate has mainly focused on the status of cryptos themselves.
By expanding its scope to mining hardware, the SEC is significantly strengthening its hold on the crypto industry. The move could require companies offering mining services to register with the SEC and meet more rigorous disclosure requirements.
The move also raises questions about the viability of many business models in the crypto mining sector. Companies will likely need to review their offerings and marketing practices to avoid possible prosecution for selling unregistered securities.
In short, this legal victory for the SEC marks a turning point in the regulation of the crypto sector in the United States. It likely heralds a wave of new legal actions and could force a major restructuring of the mining industry.
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