A federal judge has ruled that the U.S. Securities and Exchange Commission (SEC) must pay a sum of over $1.8 million as a penalty in its case against the crypto company Digital Licensing, also known as Debt Box. The judge found that the SEC had acted in bad faith when obtaining and defending a temporary restraining order (TRO) based on misrepresentations. Additionally, the judge has granted the SEC's request to dismiss the case without prejudice.
The court case, which took place in the United States District Court for the District of Utah, saw Chief District Judge Robert J. Shelby issue two orders regarding the SEC's case against Digital Licensing Inc., also known as Debt Box. One of the orders requires the SEC to pay $1,821,824 in attorney fees and costs. This penalty was imposed due to the SEC's bad faith conduct in obtaining and defending a TRO and receivership based on misrepresentations made to the court. The court document states that on March 18:
"The court found the Commission engaged in bad faith conduct in obtaining and defending the TRO and imposed a sanction against the Commission of all attorney fees and costs arising from the improvidently entered ex parte relief."
Specifically, the SEC is required to pay various amounts to different parties involved in the case, including Calmes & Co. Inc. and Calmfritz Holdings LLC, Matthew D. Fritzsche, iX Global Defendants, FAIR Project Defendants, Debt Box Defendants’ local counsel, Debt Box Defendants’ lead counsel, Brendan J. Stangis, and the Receiver.
The second court order issued by Judge Shelby grants the SEC's motion to dismiss its case against Debt Box and associated individuals and entities without prejudice. This decision allows the SEC's new team of attorneys to review the case, conduct further investigations, and decide whether to proceed with a new complaint. However, any future related cases must be filed in the same court before the same judge to ensure continued oversight and address concerns about potential legal prejudice.
Debt Box took to social media platform X to share their response to the court decisions, stating: "The U.S. District Court for the District of Utah has officially dismissed the SEC’s case against us without prejudice. This means the case is closed, and any future action by the SEC would have to go through Judge Shelby." The company emphasized that this decision is a significant victory for both Debt Box and the industry as a whole, highlighting the importance of integrity and fairness in regulatory practices.
What are your thoughts on the judge's ruling ordering the SEC to pay $1.8 million and dismissing the case? Let us know in the comments section below.