District Judge Robert Shelby of the US District Court in Utah Federal judge has issued a warning to lawyers representing the Securities and Exchange Commission (SEC) for their false and misleading solicitation in a crypto case involving a debt box.
SEC misleads court in DEBT Box case with federal judge
According to the federal judge's order, the SEC's legal team faces the possibility of being sanctioned for convincing the court to freeze the crypto company's assets with false arguments.
For context, the agency told the court that DEBT Box plans to transfer its assets and deposits from investors abroad. This testimony prompted the court to freeze the company's bank accounts.
The SEC's legal team has been given two weeks to respond to the judge's finding that their argument against DEBT Box was without facts and without context. There is generally concern that the SEC may be targeting crypto companies, hence the reason for its baseless arguments in most cases. Cryptocurrency exchange Kraken is one of the latest companies to be accused of violating securities laws.
The agency accused Kraken of operating illegally as a securities exchange because it had not registered with the relevant authority.
Judge Shelby stressed that the SEC's "misrepresentations … undermined the integrity of the proceedings of the case" and also caused "irreparable harm" to Debt Box.
SEC sues DEBT Box for violation of securities laws
The US SEC has been at odds with the Draper, Utah-based entity for several months. It is understood that in July, the regulator filed an enforcement action against DEBT Box and four of its principals on the premise that the company intended to offer unregistered securities in the form of so-called nodal licences to US investors.
Jason Anderson, Jacob Anderson, Schad Brannon and Roydon Nelson were all named as defendants in the case. Ultimately, the allegations led to a temporary asset freeze, a restraining order and other emergency relief against DEBT Box and its executives. At the time, the crypto project refuted the allegations from the SEC.
Judge awaits response from SEC lawyers
In the SEC's latest allegation, DEBT Box also made it clear that it has no plan to move investor money outside the United States, nor does it plan to close its bank accounts before the SEC hearing. The court eventually dissolved the injunction when it found no basis for the SEC's allegation.
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