A US court sanctioned the SEC for gross abuse of power in a lawsuit against the crypto project Debt Box. Chief Judge Robert Shelby slammed the SEC for intentionally misleading the court about the evidence it obtained to secure a temporary restraining order (TRO) and freeze Debt Box’s assets last August.
The SEC initially sued Debt Box in 2023, alleging fraud and claiming the company was falsely telling customers it was selling licenses to mine cryptocurrency while creating tokens with code.
However, Debt Box filed to dissolve the temporary restraining order, asserting that the SEC had misled the court about the company moving its funds and closing its bank accounts.
In an order issued on Monday, Judge Shelby wrote that the SEC’s attorneys misled the court both in applying for the TRO and afterward when Debt Box filed to dissolve the order. The judge noted that the order focused on the TRO question and not the underlying case.
“Each piece of support the Commission offered in seeking the TRO and then later reiterated in defending the TRO proved to be some combination of false, mischaracterized, and misleading,” the order stated.
“Further, the Commission not only repeated and affirmed its misrepresentations in the face of contrary evidence. It presented new falsehoods to the court in an effort to subtly shift from its previous misrepresentations without acknowledging its previous errors.”
Following the sanctions, the SEC must cover defendants’ and receivers’ fees. An agency spokesperson mentioned they are “reviewing the decision.” The ruling underscores the importance of honesty and transparency in legal matters, especially in regulating nascent sectors like cryptocurrency.
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