SEC hit with sanctions for its ‘gross abuse of power’ in Debt Box case

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A United States district court has imposed sanctions on the Securities and Exchange Commission (SEC) for acting in “bad faith” in a lawsuit it brought against Debt Box.

The SEC initially filed a motion to dismiss without prejudice but that was denied by Judge Robert J. Shelby in a March 18 filing.

“The Commission’s above-discussed conduct constitutes a gross abuse of the power entrusted to it by Congress and substantially undermined the integrity of these proceedings and the judicial process.”

“The operation of the American judicial system rests on the fundamental proposition that every party who comes before the court is bound by and adheres to the same set of rules,” Shelby added.

The SEC was also ordered to pay Debt Box’s legal fees.

The SEC initially claimed Debt Box perpetrated a $50 million fraudulent crypto scheme amid its operations as a software mining license provider.

In August, it won a restraining order to freeze Debt Box‘s assets after claiming the firm had already sent $720,000 overseas and would flee to the United Arab Emirates and secretly transfer more assets with it if it was notified of the order.

However, Shelby reviewed his initial order and concluded the SEC misrepresented evidence and that the $720,000 transfer was instead sent within the United States.

In December, Judge Shelby gave the SEC a “show cause order” — a type of court order that requires a party to justify, explain or prove something to the court. While the SEC accepted its actions weren’t “forthcoming,” the regulator argued a sanction wasn’t appropriate.