The U.S. Securities and Exchange Commission (SEC) filed a lawsuit in July this year in the Debt Box litigation, alleging “false statements” and misleading the judge to freeze the company’s assets. In recently released court documents, the SEC admitted to lying and expressed remorse for it, but they insisted that their actions were well-intentioned and reasonably requested the injunction.
Background:
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The SEC, without providing clear regulations on cryptocurrency regulation, pursues an enforcement-first strategy, even resorting to “false statements” to mislead the judge in order to ensure the legitimacy of their sanctions in court.
In July, the SEC applied to the court to freeze the assets of Debt Box, claiming that Debt Box (Digital Licensing Inc.) closed 33 bank accounts two days before the hearing. This action was seen as “key evidence” that Debt Box was attempting to transfer funds overseas, successfully misleading the judge to issue a temporary restraining order and freeze the company’s assets.
However, this order was withdrawn in October because Judge Robert Shelby found, after investigation, that the facts were not as the SEC described. This prompted him to issue a stern warning to the SEC’s lawyers on November 30, pointing out that their “false statements” not only undermined the legitimacy of the case but also caused irreparable harm to Debt Box. The judge eventually asked the SEC lawyers to respond within two weeks, or they could face court sanctions.
SEC admits to lying but opposes sanctions from the judge
On the 21st, the SEC admitted in its court documents that it made inaccurate statements to support the issuance of the restraining order against Debt Box. The SEC expressed deep regret for these mistakes and promised not to repeat them in future litigation.
In response, the SEC took corrective measures by assigning a senior lawyer from its Denver office to oversee the case and providing mandatory training to its staff on accuracy and candor.
However, despite their regret, the SEC still insists that their actions were well-intentioned and reasonably requested the injunction. The SEC believes that it is unreasonable for the judge to impose sanctions on them.
Source: Court documents
Details of SEC’s lawsuit against Debt Box
According to the SEC’s statement, it accused Debt Box and its principal and other defendants of selling so-called “node licenses” without registration since 2021, defrauding investors of approximately $50 million and an undisclosed amount of Bitcoin and Ethereum.
In addition, the SEC accused Debt Box of lying to investors in various aspects of its business, including falsely claiming to engage in cryptocurrency mining. Therefore, the SEC is seeking a permanent injunction, the return of allegedly illegally obtained profits, and civil penalties.
DEBT Box claims on its website to be a decentralized and environmentally friendly blockchain platform that promotes the concept of “combining cryptocurrency with commodities.” The company offers so-called “node licenses” for sale, which must be activated before mining begins.
The platform promises daily rewards through multiple “projects.” These projects appear to involve various industries, including real estate, commodities, agriculture, and technology.
Source: Debt Box website
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Tags: Debt Box, SEC