Judge Throws Out DEBT Box Case, Orders SEC to Pay $1.8M
The US District Court for the District of Utah dismissed the SEC’s case against DEBT Box on Tuesday and imposed fines exceeding $1.8 million on the regulatory body for its bad faith actions. These fines cover legal fees and court costs, following the court’s finding that the SEC misled the judge to obtain a temporary order in its favor.
In the same May 28 filing, Judge Robert Shelby approved the SEC’s request to dismiss the ongoing case without prejudice, allowing the agency to file a related case in the same court at a later date.
DEBT Box and its co-defendants had argued for the case to be dismissed with prejudice to prevent the SEC from initiating further enforcement measures. Despite this, the company expressed satisfaction with the ruling, viewing it as a favorable outcome. “This is a significant win for us. It means that the SEC cannot proceed with the case as it stands,” the firm stated on X.
DEBT Box Challenges SEC’s $49M Fraud Allegations
The judge referred to a March ruling that found the SEC acted in bad faith when obtaining a temporary freeze on DEBT Box’s assets. DEBT Box had contested the SEC’s information, alleging inaccuracies that could result in sanctions against the SEC.
In a lawsuit filed in July 2023, the SEC accused DEBT Box of operating a fraudulent $49 million scheme involving the sale of “node licenses” promising profits from cryptocurrency mining. The SEC claimed that these cryptocurrencies were never actually mined, casting doubt on the operation’s legitimacy.
The case took an unexpected turn when DEBT Box challenged the SEC’s allegations. The SEC had secured a temporary restraining order to freeze the platform’s assets, but DEBT Box accused the SEC of distorting facts to obtain it.
Judge Robert Shelby demanded an explanation from the SEC regarding its actions. Under scrutiny, SEC attorneys admitted to errors but appealed to the judge to avoid imposing formal sanctions.