SEC drops DEBT Box case after threats of sanctions, temporarily
In response to threats of court sanctions, the Securities and Exchange Commission (SEC) has decided to drop charges against Digital Licensing Inc., also known as DEBT Box, at least for the time being. The decision comes after Federal Judge Robert Shelby ordered SEC attorneys to explain why they presented what he deemed as false and misleading evidence in their attempt to obtain a temporary restraining order (TRO) against DEBT Box and other defendants. The SEC was initially granted a TRO in August 2023, but now they have filed a brief stating that they made a mistake and will work to prevent similar errors in the future. The SEC has asked the judge to accept a motion to dismiss the action without prejudice as the only penalty against them. Dismissal without prejudice would leave open the possibility for the SEC to refile charges against the defendants later on. DEBT Box’s attorneys had previously requested that the court sanction the SEC and dismiss the case entirely, citing significant personal and financial damages caused by the TRO. The defendants claim that the TRO resulted in the shutdown of their crypto firm and a substantial disruption for hundreds of thousands of users worldwide. The SEC argues that additional sanctions, including dismissal with prejudice, would be too severe of a punishment. They have stated that they are addressing the court’s concerns and seeking input from experienced trial attorneys in their Denver Regional Office.