The U.S. District Court for the District of Utah on Tuesday dismissed the SEC’s case against DEBT Box and imposed penalties exceeding $1.8 million on the regulator for bad faith actions. The penalties include legal fees and court costs. The penalties stem from the court’s finding that the SEC misled a judge to obtain a temporary ruling in its favor.
In the same May 28 filing, Judge Robert Shelby approved the SEC’s motion to dismiss the pending case without prejudice, allowing the agency to bring a related case before a judge in the same court at a later date.
DEBT Box and its co-defendants argued that the case should be dismissed subject to the SEC’s prohibition on initiating additional enforcement measures against the company. Nevertheless, the company expressed satisfaction with the verdict, considering it favorable.
“This is a significant victory for us. It means that the SEC cannot continue the case in its current form,” the company said on the X program.
Debt Box challenges SEC’s $49 million fraud case
The judge cited a March ruling that the SEC acted in bad faith when it temporarily froze DEBT Box’s assets. The company later went to court, maintaining that the commission’s information was wrong, which could result in sanctions against the SEC.
In the July 2023 lawsuit. The SEC alleged that Debt Box ran a $49 million fraudulent scheme selling “node licenses” that promised profits from mining cryptocurrencies. The SEC claims the currencies were never mined, casting doubt on the legitimacy of the entire operation.
The DEBT Box case took an unexpected turn when the defendants challenged the SEC’s allegations. The regulator obtained a temporary restraining order to freeze the crypto platform’s assets. However, the company accused the SEC of distorting facts to obtain such information.
In response, Judge Robert Shelby demanded an explanation from the SEC for its actions. Facing scrutiny, SEC lawyers admitted mistakes, but urged the judge to refrain from imposing formal sanctions.
