The United States Securities and Exchange Commission (SEC) has admitted to making false statements in a lawsuit against crypto startup DEBT Box. These misleading statements led to a freezing of the company’s assets and the closure of dozens of its bank accounts.
SEC in hot seat for ethical breaches in crypto affair
Last November, the SEC obtained a temporary restraining order from the Utah federal court against DEBT Box, an American crypto startup. This injunction was intended to prevent the company from transferring funds to foreign investors. To obtain this, the regulator falsely claimed that DEBT Box had already started closing its bank accounts.
However, DEBT Box subsequently demonstrated that these allegations were inaccurate. No transfer of funds outside the United States had taken place. His lawyers then argued that the SEC’s misrepresentations had caused him a ” irreparable harm “.
Faced with these accusations, Federal Judge Robert J. Shelby ordered the SEC’s lawyers to justify their misleading statements. He gave them two weeks to respond to his grievances, or face heavy financial penalties.
The SEC pleads good faith
In his replica In court this week, the SEC admitted it was negligent and made false statements. Nonetheless, she continued to assert that she acted in “good faith” and was entitled to seek an injunction.
The regulator also announced several measures to rectify the situation. Senior attorneys from the Denver regional office will now oversee this thorny crypto case. In addition, all employees of the legal division will undergo mandatory training on the duty of accuracy and transparency.
Recall that the SEC is suing DEBT Box for allegedly defrauding thousands of investors out of $49 million. The company allegedly sold fictitious “mining licenses” in crypto, promising guaranteed income.
According to the initial complaint, DEBT Box planned to move its assets overseas to avoid prosecution. But Judge Shelby determined that the SEC had not provided enough evidence to support these allegations.
The outcome of this controversial trial still remains uncertain. The SEC will have to be more rigorous if it hopes to win its case.
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