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Judge Robert Shelby, who presided over the case in Utah’s U.S. District Court, ruled that the SEC must pay for legal fees.
A federal judge has ruled that the U.S. Securities and Exchange Commission (SEC) must pay legal costs for DEBT Box after finding that the regulator had committed a ‘gross abuse of power’ in its efforts to secure a temporary restraining order.
The Case Between SEC and DEBT Box
The case involved the judge criticizing the SEC’s misleading statements and the agency admitting that it had fallen short of expectations. Furthermore, the judge denied the SEC’s move to dismiss the case without prejudice. DEBT is a Utah-based crypto company that the SEC sued.
The legal fees will arise from a temporary restraining order imposed on Digital Licensing Inc., which conducted business as DEBT Box last year.
Throughout the 80-page order, Judge Shelby criticized the SEC’s behavior in getting the temporary restraining order (TRO), which included an asset freeze and a court-appointed receiver to assume the company’s control.
What Did the Judge Say?
Judge Shelby said that the SEC had expressly traded on its special standing as a federal agency and reminded the court that it had been granted this relief several times in the past ten years to demonstrate that it could be trusted when asking for this tremendous exercise of judicial authority. In addition, the court granted the TRO, which caused assets to be frozen and ‘lives were upended,’ Shelby said.
Shelby further noted, ‘in the end, once Defendants had notice and an opportunity to respond, each purportedly factual pillar the Commission constructed to make the required showing of irreparable harm crumbled under scrutiny.’
Furthermore, Each piece of support the SEC offered in seeking the TRO, later reiterated in defending the TRO, proved to be some combination of false, mischaracterized, and misleading.
DEBT Box is Fraud Claimed SEC
Last year, the SEC sued the crypto project for fraud. The company was subjected to a temporary asset freeze and a restraining order.
Moreover, DEBT Box was found to be misleading customers by claiming to sell licenses for cryptocurrency mining when, in fact, the company was only creating tokens using code. In addition, DEBT Box filed to dissolve the temporary restraining order, claiming the SEC had misled the court about the company moving its funds and closing its bank accounts.
In an order on Monday, Chief Judge Robert Shelby, from the District of Utah, wrote that the SEC’s attorneys misled the court. Apparently, they misled both while applying for a temporary restraining order and afterward when DEBT Box filed to dissolve the order.
Robert J Shelby’s Wikipedia page states that he served in the 19th Special Forces Group, 1457th Combat Engineer Battalion of the Utah Army National Guard from 1988 to 1996. He seems deeply connected with Utah; therefore, some eyebrows are being raised at his decision against the SEC.
It is no surprise that the SEC is working hard to save retail investors from crypto scam projects, but cases like these may cause a hindrance to its mission.
Summary
A federal judge has ordered the U.S. Securities and Exchange Commission (SEC) to pay legal costs for DEBT Box due to the regulator’s “gross abuse of power” in obtaining a temporary restraining order. DEBT Box was found to have misled customers by claiming to sell licenses for cryptocurrency mining.
Disclaimer
The views and opinions stated by the author or any people named in this article are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading in stocks, cryptos, or other related indexes comes with a risk of monetary loss.
Adarsh Singh is a true connoisseur of Defi and Blockchain technologies, who left his job at a “Big 4” multinational finance firm to pursue crypto and NFT trading full-time. He has a strong background in finance, with MBA from a prestigious B-school. He delves deep into these innovative fields, unraveling their intricacies. Uncovering hidden gems, be it coins, tokens or NFTs, is his expertise. NFTs drive deep interest for him, and his creative analysis of NFTs opens up engaging narratives. He strives to bring decentralized digital assets accessible to the masses.