Key Takeaways
- SEC lawyers acknowledged the mistake of making inaccurate statements against DEBT Box in its lawsuit
- SEC has requested the judge’s approval for dismissal without prejudice as the only penalty against the SEC.
In a recent development, the Securities and Exchange Commission (SEC) has expressed its intention to dismiss the lawsuit against crypto startup DEBT Box. The decision comes after the SEC admitted to making inaccurate statements during court proceedings. The initial lawsuit was filed against Digital Licensing Inc., operating as DEBT Box, back in July.
The SEC has informed Utah U.S. District Court Judge Robert Shelby about its plan to dismiss the action without prejudice, retaining the option to refile the case if needed.This move follows a series of events, including a November order from Judge Shelby to explain why SEC attorneys should not face sanctions for presenting misleading evidence in their attempt to secure a temporary restraining order (TRO) against DEBT Box and other defendants. The SEC had obtained the TRO in August 2023 based on the contested evidence.
In a recent filing, SEC lawyers acknowledged the mistake and assured the court that measures would be taken to prevent such errors in the future. The agency has requested the judge’s approval for dismissal without prejudice as the only penalty against the SEC.
The SEC’s admission in December that it made inaccurate statements led to criticism from Judge Shelby, who ordered the agency to clarify the misleading statements. The SEC contended that while its attorneys should have been more forthcoming, sanctions beyond dismissal without prejudice were not warranted.
This development is part of the SEC’s broader legal actions against various crypto firms over the past year, with Chairman Gary Gensler consistently asserting that most cryptocurrencies should be classified as securities.
DEBT Box, the subject of the SEC lawsuit, faced allegations of defrauding thousands of investors by offering “node licenses” for mining tokens, despite these tokens never being mined.
