US senators call SEC actions in Debt Box case ‘unconscionable’

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A group of five Republican lawmakers from the United States Senate have criticized the Securities and Exchange Commission (SEC) for its actions in a lawsuit against Digital Licensing, doing business as Debt Box.

In a Feb. 7 letter to SEC chair Gary Gensler, six Republican senators said they were “greatly concerned” by the commission’s conduct in the Debt Box case, claiming that the regulator operated in an “unethical and unprofessional manner.” In December, the SEC admitted in filings with the U.S. District Court for the District of Utah, Northern Division, that it had failed to be “accurate and candid” in its claims that Debt Box closed bank accounts and planned to relocate to the United Arab Emirates.

“Regardless of whether Commission staff deliberately misrepresented evidence or unknowingly presented false information, this case suggests other [emphasis added by authors] enforcement cases brought by the Commission may be deserving of scrutiny,” said the senators. “It is difficult to maintain confidence that other cases are not predicated upon dubious evidence, obfuscations, or outright misrepresentations.”

Source: U.S. Senator JD Vances office

Related: Debt Box urges judge to toss suit, says SEC got case ‘badly wrong’

The six senators — JD Vance, Thom Tillis, Bill Hagerty, Cynthia Lummis and Katie Boyd Britt — seemingly did not suggest any course of action for the SEC moving forward and only expressed the lawmakers’ concerns. They said the SEC’s solution of mandatory staff training and  reshuffling personnel may not be sufficient. 

The SEC filed a lawsuit against Debt Box in July 2023, alleging the firm perpetrated an illegal $50-million crypto scheme. On the SEC’s claims, the court approved a temporary restraining order to freeze Debt Box’s assets. However, it was later revealed many of the SEC’s assertions were inaccurate, leading to the threat of sanctions by the court and the commission petitioning to drop the case.

It’s unclear if the Republican senators intended to muddy the waters of other enforcement cases against crypto firms by the SEC. The commission has ongoing lawsuits against Binance, Kraken, Ripple and Coinbase. Cointelegraph reached out to the SEC for comment but did not receive a response at the time of publication.

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