On Monday, U.S. District Judge Robert Shelby levied sanctions against the Securities and Exchange Commission (SEC) in response to accusations of serious misconduct in the legal action against Utah-based cryptocurrency firm DEBT Box.
The decision comes after the judge determined that the SEC had committed a âgross abuse of powerâ in its handling of the case.
The case got widespread attention after the defendants accused the SEC of misrepresenting key facts to obtain a temporary restraining order freezing assets on the crypto platform.
U.S. District Judge Robert Shelby ordered the SEC to explain its actions after lawyers for DEBT Box raised concerns about the agencyâs conduct. Subsequently, the agency admitted to errors but urged the judge not to issue formal punishment.
However, in Mondayâs decision, Judge Shelby rejected the SECâs request and highlighted multiple instances of âbad faithâ conduct. He held the agency accountable for its actions, stating that it had âsubstantially undermined the integrity of these proceedings and the judicial process.â
Shelbyâs 80-page filing imposed sanctions on the SEC, requiring the agency to cover DEBT Boxâs attorneysâ fees and costs related to the restraining order. The judge rejected the regulatorâs motion to dismiss the lawsuit without prejudice, which would have allowed the agency to refile the lawsuit at a later date.
DEBT Box faced legal action from the SEC in July for allegedly defrauding investors of nearly $50 million through the sale of unregistered securities.
The watchdogâs move included a request for an ex parte temporary restraining order, typically reserved for cases where thereâs a risk of evidence destruction or flight from the country. This was after the SEC claimed DEBT Box was closing bank accounts and planning to leave the U.S.
Initially granting the SECâs request, Judge Shelby later questioned the agencyâs information accuracy, prompting a call for evidence. In December, the regulator admitted errors, with enforcement chief Gurbir Grewal apologizing for the oversight.
However, the agency sought to avoid sanctions, arguing against bad faith conduct. In January, the SEC moved to dismiss the case, maintaining sanctions werenât appropriate.
In his ruling, Judge Shelby criticized the SECâs reliance on its federal agency status to justify its actions, particularly in seeking the restraining order. Shelby expressed concern that granting the initial order disrupted lives. He also noted that the SEC not only reiterated factual inaccuracies but introduced new falsehoods in subsequent representations to the court.
Shelby emphasized that these issues couldnât be dismissed as mere unintentional errors. He concluded that the SECâs legal team made deliberate strategic choices to present false information, knowing it would not be able to secure the restraining order and asset freeze otherwise.
The post SEC Faces Sanctions for âGross Abuse of Powerâ in Debt Box Case appeared first on CryptoPotato.
The decision comes after the judge determined that the SEC had committed a âgross abuse of powerâ in its handling of the case.
SEC Slammed with Sanctions
The case got widespread attention after the defendants accused the SEC of misrepresenting key facts to obtain a temporary restraining order freezing assets on the crypto platform.
U.S. District Judge Robert Shelby ordered the SEC to explain its actions after lawyers for DEBT Box raised concerns about the agencyâs conduct. Subsequently, the agency admitted to errors but urged the judge not to issue formal punishment.
However, in Mondayâs decision, Judge Shelby rejected the SECâs request and highlighted multiple instances of âbad faithâ conduct. He held the agency accountable for its actions, stating that it had âsubstantially undermined the integrity of these proceedings and the judicial process.â
Shelbyâs 80-page filing imposed sanctions on the SEC, requiring the agency to cover DEBT Boxâs attorneysâ fees and costs related to the restraining order. The judge rejected the regulatorâs motion to dismiss the lawsuit without prejudice, which would have allowed the agency to refile the lawsuit at a later date.
DEBT Box faced legal action from the SEC in July for allegedly defrauding investors of nearly $50 million through the sale of unregistered securities.
The watchdogâs move included a request for an ex parte temporary restraining order, typically reserved for cases where thereâs a risk of evidence destruction or flight from the country. This was after the SEC claimed DEBT Box was closing bank accounts and planning to leave the U.S.
Judge Shelby Questions SECâs Integrity
Initially granting the SECâs request, Judge Shelby later questioned the agencyâs information accuracy, prompting a call for evidence. In December, the regulator admitted errors, with enforcement chief Gurbir Grewal apologizing for the oversight.
However, the agency sought to avoid sanctions, arguing against bad faith conduct. In January, the SEC moved to dismiss the case, maintaining sanctions werenât appropriate.
In his ruling, Judge Shelby criticized the SECâs reliance on its federal agency status to justify its actions, particularly in seeking the restraining order. Shelby expressed concern that granting the initial order disrupted lives. He also noted that the SEC not only reiterated factual inaccuracies but introduced new falsehoods in subsequent representations to the court.
Shelby emphasized that these issues couldnât be dismissed as mere unintentional errors. He concluded that the SECâs legal team made deliberate strategic choices to present false information, knowing it would not be able to secure the restraining order and asset freeze otherwise.
The post SEC Faces Sanctions for âGross Abuse of Powerâ in Debt Box Case appeared first on CryptoPotato.
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