After the court threatened punishment, the SEC asked to drop the debt fund case
The U.S. securities regulator wants to dismiss a lawsuit against a crypto company after a federal court ordered the agency to show cause why it shouldn't be fined for perjury.
In a lawsuit filed against the debt fund in Utah District Court at a Jan. 30 hearing, the Securities and Exchange Commission said it “has determined that the best course of action to proceed is to dismiss this action without prejudice.”
“While the commission recognizes that the lawyers should have come to court more often, sanctions are not appropriate or necessary to resolve these issues.”
The SEC first committed a $50 million crypto fraud scheme while working as a software mining license provider.
In August, the firm won a restraining order to freeze Debt Box's assets, saying it sent $720,000 overseas to the United Arab Emirates and smuggled more assets.
NEW: @SECGov has issued a brief on the @DebtBox case, saying it intends to dismiss the case against the company.
The judge is choosing dismissal over possible fines for misleading the court to secure an SEC restraining order… pic.twitter.com/ByxkG6prV4
— Eleanor Terrett (@EleanorTerrett) January 30, 2024
But the judge, Robert Shelby, reviewed the original order of the case and concluded that the SEC's evidence was incorrect and that the transfer of $720,000 was instead sent in the United States.
In December, Judge Shelby granted the SEC a “show order” — a type of court order that requires a party to prove, explain or prove something to the court.
The SEC is now asking the court to deny Debtbox's request for additional sanctions.
Dismissal with prejudice “is an appropriate maximum penalty only when there has been willful misconduct,” the SEC said. “There is no such premeditated destruction here.”
“I'm sorry, I'm so sorry. How long are you going to punish me? Why can't we just move on? Bygones be bygones, but you'll never be. The difference is this time I'm the one who did the wrong thing? Does it matter?”
Dolly Parton “Bygones” and the SEC in Surrey's Response to the Debt Box. pic.twitter.com/eS6ZStxp2A
— paulgrewal.eth (@iampaulgrewal) January 30, 2024
Related: Cryptocurrency vs. SEC: The Fight for Fair Digital Investment
“The SEC got this case wrong. It's so wrong, Debt Box's attorneys told Judge Shelby in their Dec. 4 motion to dismiss.
“The SEC must not allow a false narrative to continue to be spun to avoid layoffs.”
An SEC spokesperson told Cointelegraph that it declined to comment beyond the public filings.
I've read the documentation in Debt Box and this is very alarming behavior. The SEC went to a judge to seek an emergency order to paralyze many businesses and clearly misrepresented the facts before anyone on the other side could defend themselves.
— David “Joel Katz” Schwartz (@JoelKatz) December 5, 2023
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