The securities regulator allegedly made up reasons for wanting to shut down the company
The US Securities and Exchange Commission (SEC) is pursuing dismissing a lawsuit it filed against a crypto firm after a federal court issued an order requiring the agency to provide reasons why it shouldn’t be penalized for lying.
In a January 30 filing to a Utah District Court in its suit against Debt Box, the SEC stated it “has determined that the best way to proceed is to dismiss this action without prejudice.” It added, “While the Commission recognizes that its attorneys should have been more forthcoming with the Court, sanctions are not appropriate or necessary to address those issues.”
🚨NEW: The @SECGov has just filed a brief in the @DebtBox case saying that it intends to dismiss the lawsuit against the company.
The SEC is choosing dismissal rather than face possible sanctions from the judge for misleading the court in order to secure a restraining order and… pic.twitter.com/ByxkG6prV4
— Eleanor Terrett (@EleanorTerrett) January 30, 2024
The SEC contended Debt Box executed a $50 million fraudulent crypto plot while operating to provide software mining licenses. The agency won a restraining order to freeze Debt Box’s assets last August after claiming the company had already transferred $720,000 overseas and would escape to the United Arab Emirates and discreetly transfer more funds if it was notified of the order.
However, the judge handling the case, Judge Robert Shelby, revisited his initial order and ruled the SEC misrepresented evidence and that the $720,000 transfer was not sent overseas but to the US. Judge Shelby issued a “show cause order” to the SEC in December, a court order that demands a party to prove something to the court.
The SEC now requests that the court deny Debt Box’s plea for additional sanctions, saying that a dismissal with prejudice is “an extreme sanction appropriate only in cases of willful misconduct,” they said. “No such willful misconduct occurred here.”
“The SEC got this case wrong. Badly wrong,” said Debt Box attorneys to Judge Shelby in a motion to dismiss on December 4. “The SEC should not be allowed to continue to spin a false narrative to avoid dismissal.”
