Home Editor's Pick SEC to Pay $1.8 Million in Legal Fees to DEBT Box: Criticized for Bad Faith Conduct & False Statements

SEC to Pay $1.8 Million in Legal Fees to DEBT Box: Criticized for Bad Faith Conduct & False Statements

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A U.S. federal judge has dismissed the SEC’s case against Digital Licensing Inc., doing business as DEBT Box, without prejudice, allowing the regulator to potentially refile charges in the future.
The judge ordered the SEC to pay approximately $1.8 million in legal fees to DEBT Box, including attorney fees, costs, and receiver fees.
The ruling follows the judge’s finding in March that the SEC had engaged in bad faith conduct and made false and misleading statements when obtaining a temporary restraining order against DEBT Box.
DEBT Box hailed the dismissal as a significant victory, noting that the SEC cannot proceed with the case in its current form.
The SEC had initially filed a complaint against DEBT Box in July 2023, accusing the firm of defrauding investors of at least $49 million through the sale of unregistered securities.

AU.S. federal judge has dismissed the Securities and Exchange Commission’s (SEC) case against Digital Licensing Inc., doing business as DEBT Box, without prejudice.

The ruling, filed on Tuesday by Utah District Court Judge Robert Shelby, allows the SEC to potentially refile charges against the crypto mining firm in the future.

Alongside the dismissal, Judge Shelby ordered the SEC to pay legal fees of approximately $1.8 million to DEBT Box.

The fees include attorney fees, costs, and receiver fees incurred by the defendants during the legal battle.

The order follows the judge’s finding in March that the SEC had engaged in bad faith conduct and made false and misleading statements when obtaining a temporary restraining order against DEBT Box.

In his March filing, Judge Shelby criticized the SEC’s conduct, particularly in seeking the ex parte restraining order, which included an asset freeze and the appointment of a court-appointed receiver to assume control of the company.

The judge found that the SEC’s purportedly factual pillars used to show irreparable harm crumbled under scrutiny once the defendants had notice and an opportunity to respond.

DEBT Box celebrated the dismissal of the case as a monumental victory, emphasizing that the SEC cannot proceed with the case in its current form.

???? We have some fantastic news to share with our D.E.B.T. Box community today!

The U.S. District Court for the District of Utah has officially dismissed the SEC’s case against us without prejudice. This means the case is closed, and any future action by the SEC would have to go… pic.twitter.com/aGiNVxMYbz

— D.E.B.T. (@TheDebtBox) May 28, 2024

The firm expressed satisfaction with the ruling, despite arguing that the case should have been dismissed with prejudice to bar the SEC from initiating additional enforcement measures against the company.

The SEC had initially filed a complaint against DEBT Box in July 2023, accusing the firm of defrauding investors of at least $49 million through the sale of “node licenses” that promised profits from mining cryptocurrencies.

The regulator alleged that these currencies were never actually mined, casting doubt on the entire operation’s validity.

However, the case took an unexpected turn when DEBT Box contested the SEC’s allegations and accused the commission of distorting facts to obtain the temporary restraining order.

In response, Judge Shelby demanded an explanation from the SEC regarding its actions. Faced with scrutiny, the SEC’s attorneys admitted errors but appealed to the judge to refrain from imposing formal sanctions.

The dismissal of the case and the imposition of legal fees on the SEC serve as a setback for the regulator in its ongoing efforts to enforce securities laws in the cryptocurrency industry.

The case highlights the importance of accurate and candid representations by regulatory bodies when seeking court orders and the potential consequences of engaging in bad faith conduct.

As the SEC continues to pursue lawsuits against several crypto firms, including Binance, Kraken, Ripple, and Coinbase, the DEBT Box case may have implications for the regulator’s approach.

Many lawmakers in the U.S. Congress have been pushing for such clarity through legislation like the Financial Innovation and Technology for the 21st Century Act.

The post SEC to Pay $1.8 Million in Legal Fees to DEBT Box: Criticized for Bad Faith Conduct & False Statements appeared first on Blockonomi.

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