U.S. District Judge Robert Shelby has asked U.S. SEC attorneys to clarify inconsistencies in the agency’s lawsuit against cryptocurrency company Debt Box. In August 2023, the SEC obtained an order temporarily freezing the company’s assets and obtained an injunction. Just days before the temporary injunction hearing, the SEC learned that a significant portion of the funds held in Debt Box’s controlled bank accounts had been withdrawn. According to Welch, the defendants have closed about 33 accounts in the last 48 hours.
Debt Box’s defense presented documents in court showing that those 33 accounts were closed by the bank, not by the defendant. Debt Box’s attorneys announced that the company began implementing a plan to move to the United Arab Emirates a year before the regulator sued it. And $720,000 in funds withdrawn from the closed accounts were transferred to Mountain America Credit Union, a credit cooperative, rather than overseas.
Given the significant discrepancies between the SEC’s allegations and the defendants’ arguments, the court issued an order requiring the Commission to produce more compelling evidence within 14 days. Refusing to provide the information would mean the SEC has provided misleading information to the court, followed by sanctions against the agency Robert Shelby warned.
Earlier, Republican U.S. Congressman Warren Davidson proposed the removal of Gary Gensler as SEC chairman over unreasonable denials to launch bitcoin exchange-traded funds.