SEC Sanctioned for Inaccurate Statement
A federal judge in Utah has penalized the U.S. Securities and Exchange Commission (SEC) for making a false statement in a crypto fraud case.
Allegations of Fraud
In July 2022, the SEC accused Digital Licensing Inc. (DEBT Box) of selling fake “node licenses” to investors, promising they would generate crypto assets through mining. The company allegedly raised $50 million and unspecified amounts of Bitcoin and Ethereum.
SEC’s Misrepresentation
The SEC obtained a temporary restraining order (TRO) against DEBT Box by claiming the company was funneling investor funds into luxury purchases and overseas accounts. However, the defendants claimed the SEC misrepresented facts.
SEC’s Admission
In December, the SEC admitted that one of its lawyers had made an inaccurate statement at the initial hearing. The SEC also acknowledged presenting interpretations and inferences as facts.
Judge’s Ruling
Judge Robert Shelby called the SEC’s conduct a “gross abuse of power” that undermined the integrity of the proceedings. He imposed sanctions, including attorneys’ fees and costs for all expenses arising from the TRO.
Implications
The ruling raises concerns about the SEC’s conduct in other cases and highlights the importance of accuracy in legal proceedings.
