SEC must pay 1.8M USD after ruling in favor of Debt Box

SEC Debt Box

IMPORTANT POINTS:

  • The judge dismissed the case against Debt Box and ordered the SEC to pay $1.8 million in fees.
  • The court found that the SEC acted in bad faith in attempting to freeze Debt Box’s assets.
  • The case has been cited as an example of regulatory overreach by the SEC in the cryptocurrency space.

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The federal judge has ordered the U.S. Securities and Exchange Commission (SECto pay approximately $1.8 million in attorney fees and receivership costs related to the civil case against Digital Licensing, the company doing business as Debt Box.

Court order details

In a document filed May 28 in the U.S. District Court for the District of Utah, Judge Robert Shelby signed an order requiring the SEC to pay approximately $1 million in attorneys’ fees and costs and $750,000 in receivership fees and costs. The order was issued the same day the case was dismissed without prejudice.

The judge cited a March ruling in which a court found that the SEC “acted in bad faith” regarding a temporary restraining order freezing Debt Box’s assets. The company then filed documents with the court alleging that the commission’s information was inaccurate, leading to the threat of sanctions.

Sanctions against the SEC

The sanctions against the SEC required the commission to cover “all attorneys’ fees and costs arising from improperly entered ex parte relief . ”Judge Shelby essentially ruled that all of the costs requested by the defendants in the case were “appropriate,” except for a fee of $649.

“This is a significant win for us,” Debt Box said in a May 28 X post. “This means that the SEC cannot proceed with the case as it is.”

Context of the case

The SEC’s lawsuit against Debt Box in July 2023 alleged that the company perpetrated a $50 million illegal cryptocurrency scheme. Since the company filed documents suggesting that the commission had made false statements and misrepresentations in attempting to obtain a temporary restraining order against the company, many in the cryptocurrency space have cited it as an example of regulatory overreach.

The commission has ongoing lawsuits against several cryptocurrency companies, including Binance, Kraken, Ripple, and Coinbase. Many lawmakers in the US Congress have been pushing for greater regulatory clarity at the SEC on digital assets through legislation such as the 21st Century Financial Technology and Innovation Act.