SEC Admits Inaccuracies, Drops Fraud Lawsuit Against Crypto Company Debt Box

News | February 21, 2024 By:

On Tuesday, January 30, 2024, the U.S. Securities and Exchange Commission (SEC) requested to dismiss its fraud lawsuit against cryptocurrency company Debt Box without prejudice amid acknowledged inaccuracies presented in court.

The SEC had initially accused Debt Box, which does business as Digital Licensing Inc., of defrauding investors out of $49 million through the alleged sale of “node licenses” that were not actually used for cryptocurrency mining as claimed. However, the case took a turn when SEC lawyers were forced to concede before a federal judge that some statements made in the proceedings contained false or misleading information.

Specifically, SEC attorneys acknowledged that a statement presented earlier that Debt Box was attempting to move assets overseas in an apparent effort to evade U.S. jurisdiction was misrepresented. In response to criticisms from United States District Court Judge Robert Shelby in Utah, the SEC was compelled to explain its actions through a “show cause order.” While still maintaining that sanctions were unnecessary, the SEC admitted in its recent court filing that its legal team should have been more forthright and transparent with the judicial system.

Given the damage done to its credibility and case due to the disclosed inaccuracies, the SEC opted to dismiss the charges against Debt Box without leaving open the possibility to refile in the future. However, this has led to debate regarding the agency’s aggressive enforcement of cryptocurrency regulations.

Debt Box lawyers blasted the SEC, asserting that it had pursued the suit while badly mistaken about key facts and should not be permitted to propagate a false narrative.

Please contact BlockTribune for access to a copy of this filing.