A U.S. judge is warning the SEC with threatened sanctions after the Securities and Exchanges Commission used false” arguments in a case against crypto firm Debt Box. The commission’s lawyers used these arguments to convince a court to impose a temporary restraining order on Debt Box.
The court filing from Chief Judge Robert J. Shelby of Utah shows that the SEC attorneys could be sanctioned for making “misleading” arguments about crypto project Debt Box’s alleged efforts to transfer its assets and investors’ funds overseas. In turn, the court could freeze the project’s bank accounts. The SEC’s “misrepresentations… undermined the integrity of the case’s proceedings,” in addition to causing Debt Box “irreparable harm,” Judge Shelby said in the court order.
Furthermore, Debt Box has demonstrated it had neither moved funds outside the U.S. nor closed its bank accounts before the SEC’s hearing. A federal judge first slapped Debt Box with a temporary restraining order, restricting its access to its assets in August. However, after Debt Box proved the allegations false, the judge later dissolved the order.
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The Securities and Exchanges Commission first sued Debt Box in July, alleging the company had planned to sell unregistered securities called “node licenses,” beginning in 2021. The SEC alleges that Debt Box told investors the licenses would mine cryptocurrency that would increase in value, but they were instead minting the crypto themselves using computer code. Debt Box of course denies the allegations. The SEC and its attorneys have yet to comment on the latest threats by Chief Judge Shelby.