Federal Judge Criticizes SEC's Conduct in Blockchain Firm Dispute

Federal Judge Condemns SEC's Actions Against DEBT Box as "Gross Abuse" of Authority

Mar 19, 2024 - 09:34
Mar 19, 2024 - 09:34
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Federal Judge Criticizes SEC's Conduct in Blockchain Firm Dispute
Federal Judge Criticizes SEC's Conduct in Blockchain Firm Dispute

A federal judge in the United States has strongly criticized the Securities and Exchange Commission (SEC) for what he termed a "serious abuse of power" in its ongoing dispute with blockchain firm Digital Licensing, operating under the name DEBT Box.

The SEC initiated legal action against DEBT Box last July, alleging that the company had deceived investors out of nearly $50 million. However, Chief District Judge Robert Shelby did not mince his words in rebuking the SEC's conduct. He accused the regulatory body of acting in "bad faith" and spreading misinformation to secure an asset freeze and temporary restraining order against DEBT Box.

One of the SEC's key allegations was that DEBT Box was attempting to transfer its assets overseas. This claim was based on a YouTube video where DEBT Box discussed the advantages of operating in the United Arab Emirates (UAE) compared to the uncertain regulatory landscape in the U.S. However, lawyers representing DEBT Box vehemently denied these accusations, stating that the video merely highlighted the benefits of the UAE without any intention of evading U.S. securities laws.

Judge Shelby not only condemned the SEC's actions but also imposed sanctions on the regulatory body. As part of the ruling, the SEC was ordered to cover DEBT Box's legal fees and expenses. However, Judge Shelby clarified that this decision did not reflect on the merits of the case against DEBT Box but solely on the misconduct of the SEC.

Critics have long accused the SEC, led by Chair Gary Gensler, of adopting an aggressive stance toward crypto companies. Gensler's skepticism of the industry has sparked concerns among crypto executives, who fear excessive regulatory oversight. Some industry observers have even warned that the hostile regulatory environment in the U.S. could prompt significant players in the crypto space to relocate offshore.

Following the judge's scathing remarks, an SEC spokesperson stated that the regulatory body is currently reviewing the ruling and its implications.

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