A U.S. District Court Judge has mandated the Securities and Exchange Commission (SEC) to reimburse DEBT Box, a cryptocurrency firm, nearly US$1.8 million in legal fees.
This order follows the dismissal of the SEC’s lawsuit against DEBT Box, which had alleged fraudulent activities involving US$50 million in sales.
The case was dismissed without prejudice, leaving the door open for potential future action, but not without the court highlighting the SEC’s missteps and misrepresentations during the process.
The SEC’s initial lawsuit against DEBT Box included an asset freeze based on an ex parte restraining order, which was later determined to have been obtained through misrepresented facts.
Judge Robert Shelby’s ruling not only requires the SEC to cover DEBT Box’s legal costs but also serves as a critique of the agency’s conduct.
The SEC will pay approximately US$1 million in attorney fees and US$750,000 in receiver fees, reflecting the financial burden of the case on the crypto firm.
Despite an apology from SEC enforcement chief Gurbir Grewal, the judge insisted on imposing sanctions, dismissing the idea that the SEC’s actions were simply oversights.
The SEC’s failed lawsuit against DEBT Box began with serious accusations of investor fraud through the sale of unregistered securities.
However, the SEC’s procedural conduct, characterized by the use of misleading statements to secure a restraining order, ultimately led to the dismissal of the charges and the financial penalty imposed on the regulatory body.
