SEC Faces Warning from Judge Amid Allegations of Deceptive Tactics in DEBT Box Crypto Case
United States District Judge Robert Shelby has issued a stern warning to Securities and Exchange Commission (SEC) lawyers, hinting at possible sanctions in the legal action against Digital Licensing Inc., also known as DEBT Box, a cryptocurrency company accused of deceiving investors by around $50 million through the sale of unregistered securities known as “node licenses.”
Inconsistencies in the SEC's case surfaced as Judge Shelby discovered inaccuracies in the initial claim that led to the freezing of DEBT Box’s assets.
Allegations of the company relocating to Dubai were proven false, with no bank account closures and an alleged overseas transfer of $720,000 revealed to be domestic.
Expressing concerns about SEC lawyers' conduct, Judge Shelby suggested violations of federal court Rule 11(b), which mandates evidence-backed factual claims. In response, he issued a “show cause order,” demanding the SEC to justify why they should not face penalties for these actions.
The complexity of the case gains depth with a TRM Labs report supporting the SEC’s primary claim that DEBT Box deceived investors regarding mining tokens. The defense counsel is yet to provide a statement, and the SEC, acknowledging the order, plans to respond within the specified two-week timeframe.
This legal development underscores the intricacies of cryptocurrency regulation, emphasizing the importance of legal accountability in high-stakes financial litigation.
Ripple lawyer John E. Deaton, unswayed by the SEC's alleged dishonesty, suggests personal biases in crypto cases and calls for a subpoena against the financial regulator. His colleague, Ripple chief technology officer Stuart Alderoty, highlights troubling patterns observed in the SEC’s conduct in cryptocurrency-related matters, raising questions about the agency's credibility in such cases.
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- Feb 16, 2024 1:09 amLegal showdown as Debt Box takes on SEC’s strategic maneuverSoftware firm Debt Box has launched a counterattack against the United States Securities and Exchange Commission (SEC), alleging that the regulator’s bid to dismiss a contentious enforcement action is a strategic ploy to gain preferential treatment in federal courts. SEC’s motion to dismiss met with resistance In a filing, Debt Box vehemently opposed the SEC’s […] source: https://www.cryptopolitan.com/legal-showdown-as-debt-box-takes-on-sec/
- Feb 15, 2024 6:31 pmDebt Box counters SEC’s bid for dismissal, alleges strategic maneuverDebt Box argued that the SEC’s move to dismiss is an attempt to receive special treatment in federal courts compared to entities it regulates. source: https://cointelegraph.com/news/debt-box-counters-sec-dismissal
- Feb 09, 2024 7:11 amRepublican senators raise concerns about SEC's inaccurate statements in DEBT Box caseRepublican senators are unhappy with SEC Chairman Gary Gensler for making inaccurate statements in his lawsuit against crypto startup DEBT Box. Senators Cynthia Lummis of Wyoming, Bill Hagerty of Tennessee, Katie Boyd Britt of Alabama, Thom Tillis of North Carolina and J.D. Vance of Ohio wrote to Gensler on Wednesday. , the SEC’s mission to protect investors and maintain fair markets was “undermined” by the way it handled the case. “We are deeply concerned about the commission’s conduct in this case,” they said in the letter. “It is important for any federal agency — especially one that is regularly involved in significant legal proceedings and, under your leadership, has been routinely and repeatedly prosecuted through enforcement actions. It is inconceivable that an agency that was not governed by rules to pursue its regulatory mandate could operate in such an unethical and unprofessional manner." The SEC first sued Digital Licensing Inc., which did business as DEBT Box, in July, accusing it of defrauding thousands by providing customers with so-called "node licenses" to profit from mining 11 tokens. Investors raised at least $49 million, although the tokens were never mined.
- Feb 09, 2024 4:36 amUS senators call SEC actions in Debt Box case ‘unconscionable’The U.S. Securities and Exchange Commission admitted to not being “accurate and candid” in its filings related to Debt Box, later petitioning the court to drop the case. source: https://cointelegraph.com/news/us-senators-sec-actions-debt-box
- Jan 31, 2024 2:25 pmSEC, 제재를 피하기 위해 DEBT Box 암호화폐 소송 기각 요청미국 증권거래위원회(SEC)가 연방 판사의 제재를 피하기 위해 암호화폐 회사 DEBT Box에 대한 소송을 기각하기로 결정했습니다. 이번 결정은 특히 게리 겐슬러 위원장의 지휘 아래 SEC의 암호화폐 관련 사건 처리에 대한 조사가 강화되고 있는 가운데 나온 것입니다. 이 사건은 처음에 뎁트박스가 투자자들에게 약 5천만 달러를 사취한 혐의로 기소되었습니다. 이 사건은 암호화폐를 둘러싼 규제 환경에 대한 지속적인 논쟁의 초점이 되었습니다. SEC, 뎁트박스 소송에서 손을 떼다 SEC는 2023년 7월, 2021년부터 미등록 증권으로 ‘노드 라이선스’를 제공했다는 이유로 DEBT Box를 처음 고소했습니다. DEBT Box 노드 라이선스 설명. 출처: DEBT... source: https://kr.beincrypto.com/base-news/46729/
- Jan 17, 2024 1:45 amDebt Box v. SEC: Disturbing Details EmergeIndustry leaders have waded into Debt Box and SEC saga with new detail that just surfaced source: https://u.today/debt-box-v-sec-disturbing-details-emerge
- Dec 06, 2023 10:44 pmDebt Box urges the court to dismiss SEC’s lawsuitIn a recent legal development, Debt Box and several co-defendants are vigorously seeking the dismissal of a lawsuit brought forth by the United States Securities and Exchange Commission (SEC). This move follows a court’s determination that the SEC employed deceptive tactics to secure a temporary restraining order against them. Debt Box wants allegations against the ... source: https://www.cryptopolitan.com/debt-box-urges-the-court-dismiss-sec-lawsuit/
- Dec 05, 2023 5:15 pmTerraform Labs initiated a motion for summary judgment, supported by “the SEC’s alleged false statements in the DEBT Box case”Terraform Labs faced a securities lawsuit from the U.S. SEC and requested a summary judgment on December 4, 2023 to settle the case. According to the presiding judge’s statement, the defendant cited the handling of another company, DEBT Box, in the SEC lawsuit to point out that the regulator misinterpreted the facts in the case. In a separate case involving a company called Digital Licensing Inc. (doing business as DEBT Box), the judge criticized the SEC's actions. SEC lawyers could face sanctions for making “misleading” arguments alleging that crypto project Debt Box moved its assets and investor funds overseas, according to an order signed by U.S. District Court Judge Robert Shelby in Utah. This led to a court freezing the project’s bank accounts. The latest filing claims that DEBT Box had an impact on the U.S. SEC’s “general use of evidence excerpts” in the Terra case. It also weighs on part of the SEC's amended complaint, which alleges that Terraform Labs and Kwon retained control of the funds or diverted them. (CryptoSlate)
- Dec 02, 2023 5:08 amFederal Judge Orders SEC to Explain Misleading Evidence in DEBT Box CaseAccording to Blockworks, a federal judge has ordered the US Securities and Exchange Commission (SEC) to explain why its attorneys should not be sanctioned for presenting false and misleading evidence in the DEBT Box case. In July 2023, the SEC accused Digital Licensing, operating under the name DEBT Box, of offering an unregistered security and defrauding investors of at least $49 million. The SEC's legal team claimed the defendants were attempting to move assets and investor funds overseas, citing bank statements and account closures as evidence. This led to the granting of a temporary restraining order (TRO) to freeze the company's assets. However, two groups of defendants and relief defendants moved to dissolve the TRO in September, claiming the SEC had misled the court in their initial application. The SEC then tacitly acknowledged that no bank accounts were closed in July 2023 and that the accounts that were closed were shut down by the banks, not the defendants. The TRO was dissolved in October 2023. The SEC has received the order and will respond to the court as directed, according to a spokesperson.
- Feb 02, 2023 6:25 pmCrypto Mining Firm BIT Mining Returns to NYSE Standards for Continued ListingCryptocurrency mining company BIT Mining Limited announces that it has received notice from the New York Stock Exchange that the company has re-complied with the NYSE's continuing listing criteria, a letter dated January 31, 2023, stating that the company will remain open as of January 2023 The 30-day 30-day average stock price calculation shows that the company's stock price is higher than the NYSE-based 30-day average. As a result, companies are no longer considered to be below the $1 ongoing listing criteria. Foresight News previously reported that the mining company BIT Mining may be forced to delist at the end of July 2022 due to its stock price falling below $1 for several consecutive days.
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