SEC Apologizes to Judge For ‘Shortfalls’ in DEBT Box Case
Attorneys from the Securities and Exchange Commission (SEC) formally apologized for their admitted shortfalls in seeking an asset freeze against crypto firm DEBT Box. The confession comes after a Utah judge rebuked the agency for “materially false” statements undermining case integrity.
- SEC lawyers apologize for misstatements in the DEBT Box case.
- Made “false representations” on asset freeze filings, per judge.
- The enforcement head promises mandatory staff training.
- Cites need to ensure the duty of “accuracy and candor.”
In a July lawsuit alleging $50 million in investor fraud, the SEC persuaded the court to issue a restraining order and account freeze by claiming DEBT Box sought to move assets overseas. This would necessitate urgent action before funds disappeared.
However, the defendants later refuted those representations. While the SEC suggested impending overseas asset transfers, the factual record showed previous business changes unrelated to the legal proceedings.
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US Judge Slammed the SEC For Its Misstatements
In response, U.S. District Judge Robert Shelby slammed the SEC for undercutting proceedings through misstatements, jeopardizing public trust.
In their response, SEC attorneys acknowledged that they failed to meet the expected standards of accuracy and truthfulness in representations made to the court.
“I fully appreciate the extraordinary responsibility entrusted to the SEC when enforcing federal securities laws.” “I understand that the Division fell short of these standards in this case, and I apologize for that shortfall,” said SEC enforcement chief Gurbir Grewal.
SEC Enforcement Director Gurbir Grewal stated that mandatory staff training would be implemented to prevent such investigations from leading to lapses in evidence disclosure.
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While not admitting to intentional staff misconduct, the SEC filing acknowledges failing to properly contextualize and qualify specific representations due to time pressures in preparing the case.
It is not just the commission that is facing the heat due to the lack of a proper crypto regulatory framework. SEC Chair Gary Gensler also invited backlash from the Ripple CEO and the community for his comments on the crypto industry.
