The SEC faces sanctions for using the power
. However, in Monday decision, Judge Shelby denied the SEC request, citing several instances of misconduct.
On Monday, US District Judge Robert Shelby imposed sanctions against the Securities and Exchange Commission (SEC) in response to allegations of serious misconduct against Utah-based cryptocurrency firm DEBT Box. The ruling came after the judge found that the SEC had abused its power in handling the case. The case gained widespread attention after the defendants alleged that the SEC misrepresented key information in order to obtain a temporary restraining order blocking assets on the cryptocurrency platform.
U.S. District Judge Robert Shelby ordered the SEC to explain its actions after DEBT Box's lawyers raised concerns about the agency's conduct. Subsequently, the agency admitted its mistakes but asked the judge not to issue a formal penalty. However, in Monday's decision, Judge Shelby denied the SEC's request, citing several instances of misconduct. He held the agency responsible for its actions and argued that the SEC had significantly undermined the integrity of the judicial process.
Shelby filed sanctions against the SEC, requiring the agency to cover DEBT Box's attorneys' fees and costs related to the restraining order. The judge denied the regulator's request to dismiss the lawsuit without prejudice, which would have allowed the agency to renew the lawsuit at a later date. DEBT Box was sued by the SEC in January for allegedly defrauding investors of nearly $50 million by selling unregistered securities.
The regulatory agency's action includes a request to issue a temporary restraining order and is usually issued for cases where there is a risk of destroying evidence or fleeing the country.
The move followed SEC allegations that DEBT Box was closing bank accounts and planning to withdraw from the United States.
However, the agency tried to avoid sanctions by providing reasons to defend its misconduct. In January, the SEC moved to dismiss the case, but upholding the sanctions was not appropriate. In his ruling, Judge Shelby criticized the SEC's reliance on its federal agency status to justify the actions it took, particularly in its request for an injunction. Shelby Bayan says the SEC not only repeated the mistakes, but introduced new lies to the court in subsequent statements.
Shelby emphasized that these issues cannot be simply dismissed as unintentional errors. He concluded that the SEC's legal team made deliberate strategic choices to provide false information because it knew it would otherwise be unable to obtain an injunction and asset freeze.
