SEC Seeks to Dismiss DEBT Box Case Amid ‘Materially False’ Statement Claims

Jimmy Aki
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The U.S. Securities and Exchange Commission (SEC) has decided to drop charges against DEBT Box, aka Digital Licensing Inc., due to potential sanctions for presenting misleading evidence in restraining the crypto firm.

SEC Argues Court Sanctions

In a January 30 court filing, the SEC dismissed its case against DEBT Box without prejudice.

Acknowledging the importance of attorney transparency, the SEC opposed court sanctions, considering them unnecessary. However, if needed, the SEC filing suggests limiting sanctions to dismissing the case without prejudice.

Dismissal without prejudice allows the U.S. regulatory body to refile litigations against the defendants in the future.

The development comes after the SEC obtained a temporary asset freeze and restraining order against DEBT Box on August 3, 2023. This was based on the firm’s alleged involvement in a $50 million fraudulent crypto scheme.

The regulatory body further expressed that the crypto firm and executives lied to investors about unregistered offerings. Other allegations include false statements about crypto asset mining and token price increases.

However, on November 30, the U.S. District Court for the District of Utah lifted the asset freeze due to the SEC’s misrepresented evidence. The court refuted the SEC’s claim that Debt Box closed bank accounts amidst a move to the UAE to evade jurisdiction.

Subsequently, on December 4, DEBT Box filed a motion to dismiss, asserting the SEC misconstrued the case.

DEBT Box’s attorneys argued before Judge Robert Shelby that the SEC presented a false narrative.

This led to Shelby issuing a “show cause order,” compelling the SEC to justify why it shouldn’t face penalties for its actions.

The court’s decision to lift the asset freeze and the subsequent motion to dismiss highlight the dispute over the SEC’s allegations and the need for a fair evaluation of the case.

SEC and DEBT Box Locked in Repayment of Fees

In light of this, DEBT Box sought to dismiss the case with prejudice and asked the judge to order the SEC to pay the defendant’s fees. The temporary restraining order and asset freeze costs were also included in the repayment.

However, the SEC’s latest filing does not meet the defendants’ demands. While the agency agreed to dismiss the case, by doing so without prejudice, it could bring the charges again.

SEC lawyers argued that dismissal with prejudice is only appropriate in cases of “willful misconduct.” They also opposed granting the defendants’ request for repayment.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.