The SEC, led by attorney Michael Welsh, had persuaded the court to freeze DEBT Box’s assets, arguing that the crypto company had moved to Dubai beyond US regulatory reach. Now the Judge questions the veracity of the DEBT Box case. Therefore, the SEC faces the threat of sanctions. Elsewhere, Ripple lawyer Stuart Alderoty says the SEC is increasingly backed into a corner.
SEC failed in the DEBT Box case!
United States District Judge Robert Shelby ruled against Digital Licensing Inc., also known as DEBT Box, a crypto company. He warned Securities and Exchange Commission (SEC) lawyers, pointing to possible sanctions for allegedly deceptive statements in the lawsuit filed against him. Initially, the SEC filed a lawsuit against the company in Utah federal court. In this case, the SEC alleged that DEBT Box defrauded investors of approximately $50 million through the sale of unregistered securities known as “node licenses.”
Judge Shelby’s decision revealed significant inconsistencies in the SEC’s case. Initially, the SEC, led by attorney Michael Welsh, argued that the company had moved to Dubai beyond U.S. regulatory reach. Thus, he convinced the court to freeze DEBT Box’s assets. It was later revealed that these claims were not true and that the company did not close its bank accounts. Additionally, it was understood that the international transfer of $720,000, which was among the allegations, was domestic.
The judge gave a “show cause order” to the SEC!
The judge expressed concern about the conduct of SEC attorneys. Misrepresentations of facts and failure by other team members to correct those misstatements may have violated federal court Rule 11(b), which requires factual allegations supported by evidence. This led Judge Shelby to issue a “show cause order” to the SEC. The SEC now needs to provide reasons why it should not be penalized for these actions.
The complexity of the case is highlighted by a TRM Labs report confirming the SEC’s primary allegation that DEBT Box deceived investors regarding mining tokens. The defense lawyer did not make a statement on the matter. Additionally, the SEC agreed to the order, planning to respond within the two-week period specified by Judge Shelby. This milestone represents a very important moment for the cryptocurrency world.
Ripple lawyer reveals “disturbing pattern” for SEC!
Ripple senior attorney Stuart Alderoty pointed out what he perceived as inconsistencies and failures in the SEC’s handling of crypto-related cases. Alderoty’s comments come amid ongoing legal disputes involving the SEC and various cryptocurrency organizations, where courts have criticized the SEC on multiple occasions for its approach and decisions.
Ripple’s lawyer pointed out several important legal developments that the SEC appears to be fighting. As you follow from Kriptokoin.com, especially in the SEC and Ripple case, the court accused the SEC of “hypocrisy”. The court criticized the SEC for inconsistent arguments and lack of “fidelity to the law.” We witnessed similar sentiments in the SEC and Coinbase case. The court agreed that the SEC failed in its duty to respond in good faith. Additionally, in Grayscale v. SEC, the SEC was criticized for its “arbitrary and capricious” treatment of similar products. Most recently, we witnessed this in his lawsuit against Debt Box. In particular, billionaire Mark Cuban drew attention to this case in his latest post on X.
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