A federal judge in the US sanctioned the Securities and Exchange Commission for improper actions against Utah-based crypto company DEBT Box. In the ruling, the SEC’s actions were characterized as a ‘gross abuse of authority’.
According to the court ruling, the regulator will also have to pay DEBT Box’s legal costs. The judge’s decision included the following statements: “Bad faith is inseparable from bad faith conduct, and a sanction of attorneys’ fees and costs is appropriate for all costs resulting from that conduct.”
SEC said it was an offshore money transfer, but the money transfer was within the US
The background of the case is as follows: Last year, the SEC sued DEBT Box for alleged fraud and obtained a temporary asset freeze and restraining order against the company. It then alleged that the crypto company was selling cryptocurrency mining licenses but was actually creating tokens with an algorithm.
To obtain the temporary restraining order, the regulator claimed that the crypto company had already sent $720K abroad and would flee to the United Arab Emirates. It also raised concerns about the secret transfer of funds abroad if informed of the order. Although the court initially approved the order requested by the SEC, the Judge later concluded that the regulator had misrepresented the evidence. Moreover, the $720,000 transfer was made within the United States, not overseas.
“Every single piece of support that the Commission offered in requesting the TRO and then repeated in defense of the TRO proved to be a false, mischaracterized, and misleading combination,” the judge said in his final ruling.
