SEC Slammed by Judge for Abusing Power in Case Against Crypto Firm

• Judge Robert Shelby stated that the SEC misused its power in the DEBT Box lawsuit. 
• The judge asked the agency to repay the legal costs of the firm.
• The SEC sued DEBT Box in July 2023 for duping investors of at least $49 million.

The United States Securities and Exchange Commission (SEC) misused its power in a case against a digital asset platform known as DEBT Box. 

A federal district court judge in Salt Lake City said that the SEC’s conduct “constitutes a gross abuse of the power entrusted to it by Congress and substantially undermines the integrity of these proceedings and the judicial process.”

Judge Robert Shelby has ordered the SEC to pay the fees charged by the lawyers representing DEBT Box, along with other costs that are associated with the regulator’s restraining order against the digital asset platform. 

“The SEC is not above the law, and today’s decision reinforces this fact. These sanctions ought to remind the agency that there are consequences when it abuses its power to target crypto and blockchain innovation,” said Bill Hagerty, a member of the U.S. Senate from Tennessee since 2021.

The regulator filed a lawsuit against DEBT Box in July 2023, accusing it of duping investors of at least $49 million, but the judge believes that DEBT Box has made “materially false and misleading representations” in the process. 

The judge also noted that each piece of evidence that the SEC used to obtain the restraining order against the firm “proved to be some combination of false, mischaracterized, and misleading.” On the other hand, SEC enforcement chief Gurbir Grewal apologized to the judge for mistakes made in the case.The SEC has also been involved in a legal battle against leading crypto exchange Kraken. Recently, eight state attorneys general in the US filed an amicus brief while questioning the agency’s “regulatory power grab.”