SEC faces threat of sanctions as judge questions accuracy of DEBT Box case

U.S. District Judge Robert Shelby has ruled against the Securities and Exchange Commission (SEC), hinting that sanctions could be imposed for allegedly deceptive statements in a legal action against Digital Licensing Inc., also known as cryptocurrency company DEBT Box. ) warned the lawyers.

The SEC’s legal complaint, filed in federal court in Utah, alleged that DEBT Box defrauded investors of about $50 million through the sale of unregistered securities known as “node licenses.”

Judge Shelby’s decision revealed notable inconsistencies in the SEC case. Initially, the SEC, led by attorney Michael Welsh, persuaded the court to freeze DEBT Box’s assets, arguing that the company was moving to Dubai outside the scope of U.S. regulation. These claims were later found to be inaccurate, with no bank accounts being closed and $720,000 being transferred abroad from within the country.

The judge expressed concern about the conduct of SEC lawyers. The misrepresentation of facts and the failure of other team members to correct these inaccuracies may have violated Federal Court Rule 11(b), which mandates factual assertions supported by evidence. This prompted Shelby to issue a “show cause order,” requiring the SEC to show why he should not be punished for this conduct.

The complexity of the case is highlighted by a TRM Labs report supporting the SEC’s main claim that DEBT Box defrauded investors regarding mining tokens. Counsel did not provide a statement on the matter, and the SEC plans to acknowledge the order and respond within the two weeks specified by Judge Shelby.

Related: The SEC is facing another defeat in its recycling lawsuit against Kraken.

This milestone marks a pivotal moment in the legal process, highlighting the complexity of cryptocurrency regulation and highlighting the importance of liability in high-stakes financial litigation.

Ripple Attorney John E. Deaton Called He said he wasn’t surprised that the financial regulator lied, adding, “I think the SEC lawyers took it personally when it came to the cryptocurrency case.” With this, he demands a subpoena for the financial watchdog. His colleague Stuart Alderoty, Ripple’s chief technology officer, also listed A detailed analysis of problem patterns seen by the SEC.

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