A Rare and Striking Ruling: SEC Severely Sanctioned for ‘Gross Abuse of Power’ in Debt Box Case
In a rare and striking decision, a US district court has imposed sanctions on the Securities and Exchange Commission (SEC) for what has been described as a ‘gross abuse of power’ in its legal action against Debt Box.
SEC Sanctioned for Bad Faith
The SEC, which had initially requested the dismissal of its own motion without prejudice, had its request denied by Judge Robert J. Shelby. The judge criticized the regulator for deliberately misleading the court about the evidence obtained to secure a temporary restraining order and the freezing of Debt Box’s assets last August. Judge Shelby referred to the SEC’s behavior as a ‘gross abuse of power’, seriously undermining the integrity of the legal proceedings.
The Consequences of Misleading Representation
In its August lawsuit, the SEC accused Debt Box of perpetrating a $50 million fraud in its operations as a mining software licensing provider. By seeking the temporary restraining order and asset freeze, the regulator claimed that Debt Box had already sent $720,000 abroad and would flee to the United Arab Emirates, secretly transferring other assets if informed of the order.
However, it was later revealed that the $720,000 transfer had been made within the United States, casting doubt on the SEC’s representation of evidence.
Judge Shelby specifically criticized SEC lawyer Michael Welsh for misleading the court and attempting to obscure the facts.
