Judge Forces United States SEC To Pay $1.8 Million To Debt Box

A federal judge has mandated that the United States Securities and Exchange Commission (SEC) cover approximately $1.8 million in attorney and receivership fees linked to the civil case against Digital Licensing, the entity operating as Debt Box.

SEC Forced To Cover Damages

In a filing on May 28th in the U.S. District Court for the District of Utah, Judge Robert Shelby approved an order requiring the SEC to pay about $1 million for attorney fees and costs, along with $750,000 for receiver fees and costs. This directive coincided with the dismissal of the case on the same day, albeit without prejudice.

The judge referenced a ruling in March, wherein a court determined that the SEC had conducted itself in bad faith concerning a temporary restraining order to freeze all assets linked to Debt Box. Subsequently, the firm submitted documents to the court asserting inaccuracies in the information presented by the commission, prompting the potential for sanctions.

The penalties imposed on the SEC mandated the commission to shoulder all attorney fees and costs arising via the improvidently entered ex parte relief. Judge Shelby essentially affirmed that all expenses requested by the defendants were appropriate, excluding a $649 fee.

Regulatory Overreach

The lawsuit against Debt Box in July 2023 accused the company of orchestrating an illicit $50 million crypto scheme. Given the documents presented by the company suggesting inaccuracies and misrepresentations by the commission in seeking a temporary restraining order, many in the crypto community have cited it as a case of regulatory overreach.

The commission is embroiled in ongoing legal battles with several crypto entities, including Binance, Kraken, Ripple, and Coinbase. Numerous lawmakers in the U.S. Congress have advocated for regulatory clarity at the SEC concerning digital assets through legislation such as the Financial Innovation and Technology for the 21st Century Act.