SEC to reimburse US$1.8 mln after failed crypto lawsuit

A U.S. District Court Judge has authorized the Securities and Exchange Commission (SEC) to reimburse DEBT Box, a cryptocurrency firm, for approximately $1.8 million in attorneys’ fees.

This order follows the dismissal of the SEC’s lawsuit against DEBT Box alleging fraudulent activities involving $50 million in sales.

The case was dismissed without prejudice, leaving the door open for potential future actions, but the court highlighted the SEC’s missteps and misrepresentations during the process.

The SEC’s initial lawsuit against DEBT Box involved freezing assets based on a unilateral restraining order that was later determined to have been obtained through misrepresented facts.

Judge Robert Shelby’s decision not only requires the SEC to cover DEBT Box’s legal costs, but also serves as a criticism of the agency’s conduct.

The SEC will pay approximately $1 million in attorney fees and $750,000 in receivership 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, rejecting the notion that the SEC’s actions were merely careless.

The SEC’s unsuccessful 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 imposition of a financial penalty on the regulator.