The U.S. Securities and Exchange Commission (SEC) has sanctioned cryptocurrency company DEBT Box over its controversial injunction, according to a court filing on March 18.
As a result of the SEC’s misconduct, the court ordered DEBT Box to cover the legal fees, costs and expenses it incurred. This decision serves as a stern rebuke to the regulator and reinforces the importance of compliance with legal and ethical standards.
DEBT Box and the recipients have 30 days to file a fee petition, which means it is not yet known how much the SEC will pay.
Some commentators are concerned that such payments would come out of taxpayers’ money. Coinbase CLO Paul Grewal suggested The sanctions will be paid for by “every American taxpayer,” he said, adding that the SEC “has laid the bill on all of us for litigation misconduct.”
The SEC cannot refile the case.
The current motion also denies the SEC’s previous request to dismiss the case without prejudice. That would have ended the current proceedings and re-filed the case.
Despite the SEC’s interest in waiving the proceedings, recent developments do not close the case. Courts must review the regulators’ statements to determine whether the SEC was justified in seeking the controversial injunction.
Nonetheless, Judge Robert Shelby criticized the SEC’s handling of the case:
“(The SEC’s actions) are an abuse of authority delegated by Congress and substantially undermine the integrity of these processes and judicial proceedings.”
The controversy came to light when the SEC issued a temporary restraining order (TRO) and asset freeze against Debt Box, alleging it was involved in a $50 million cryptocurrency fraud scheme.
However, it was later revealed that the SEC had provided the court with misleading information, including false claims about a $720,000 transaction purporting to be an international transfer. This was actually insider trading within the United States.