A federal judge issued a rebuke to the Securities and Exchange Commission last week regarding materially false representations made while seeking to freeze $49 million related to DEBT Box.
Chief Judge Robert Shelby demanded the regulator explain why it should not face sanctions for harming case integrity after obscuring facts to win an emergency legal order.
- In November 2023, Judge Shelby ruled the SEC made misleading claims about crypto lending platform DEBT Box when covertly requesting asset seizures.
- Judge ordered the SEC to “show cause” why its conduct merits punishment given appearance of lacking candor.
- The agency responded by asking for an extension to allow a new team of lawyers to review events prompting the court’s concerns.
- SEC stated it “takes very seriously” doubts raised regarding the truthfulness of submissions.
- Judge grants an extension for the SEC to respond.
Judge Grants SEC additional time
The SEC stated in a statement on December 7 that it needed more time to prepare its response to the court’s order to show cause. The Commission gave the court the assurance that it has started a comprehensive process and takes the issues seriously.
“The Commission takes very seriously the concerns expressed by the Court in the Order to Show Cause and has undertaken a process to provide the Court with a thorough response to the Court’s questions,” the SEC lawyers wrote.
This involves hiring a fresh group of lawyers from the Office of the General Counsel (OGC) of the Commission to examine the circumstances that gave rise to the court’s worries and draft a suitable reply.
The seriousness of the situation is highlighted by the SEC’s admission of the court’s concerns and the creation of a new legal team to handle the problems. In addition, the commission requested a seven-day extension to deliver a thorough answer. Following the request, the judge has now granted the SEC time until December 21 to respond to the order.