The SEC bungled a crypto lawsuit. Then came an alleged kidnapping in Dubai—and questions about $400 million of investor funds

The story couldn’t get any stranger. Debt Box, the Wyoming-based crypto company that faced an existential lawsuit from the Securities and Exchange Commission late last year, revealed that prosecutors had misled a federal judge. In response, the judge imposed unprecedented sanctions on the Gary Gensler-led organization, sparking an uproar in the crypto industry and a slew of rebukes from politicians including J.D. Vance (R-Ohio) at the SEC.

But during that time, one of the main defendants, Jason Anderson, the company’s co-founder and co-owner, traveled to Dubai for a business meeting, according to a police report later filed by his brother in Utah and obtained by Fortune. When Anderson tried to leave the country, two of his business partners allegedly kidnapped him and forced him to hand over $400 million, along with control of Debt Box, under mental “torture,” according to his brother’s statement in the report.

The Anderson brothers did not respond to requests for comment.

The case is currently in limbo as the SEC decides whether to refile charges. But new details from the police report, interviews with key stakeholders, and other documents reviewed by Fortune reveal that the Debt Box story is still ongoing, with hundreds of millions of dollars in limbo and business partners fighting over the future of the project. It’s a story that could only happen in the world of crypto upheaval, and it reflects the dangers of the SEC’s scorched-earth campaign against the volatile industry.

Case

Debt Box launched in 2021 and offered crypto users a way to invest in “node software licenses” that allowed them to “mine” different crypto assets tied to real assets like gold and oil. However, the SEC sued the company in federal court last July, filing a sealed complaint alleging that Debt Box offered unregistered digital assets that were “fake.” Still, the project was profitable, and the company earned around $50 million from investors.

As part of the charges, the SEC alleged that the defendants, who included the two Anderson brothers, 11 other business partners and a handful of related firms, took steps to evade law enforcement, including moving operations to the United Arab Emirates. The SEC obtained a temporary restraining order and asset freeze from a judge using an extraordinary process in which the defendants were not notified of the lawsuit filed against them.

The agency’s case began unraveling in December. After Debt Box learned of the seizures, which included the closure of bank accounts, the company’s lawyers argued that the SEC had obtained the secret restraining order without cause. The judge responded by ordering prosecutors to share more evidence.

The story continues

After SEC enforcement chief Gurbir Grewal admitted that the agency had “fallen short,” a judge in mid-March imposed financial penalties on the agency for “bad faith” conduct — an unprecedented action against a federal agency — and dismissed the case, but did so to give the SEC the option to refile the charges at a later date. The disastrous case quickly became a rallying cry for Gensler’s outspoken critics in the crypto industry and across Congress, and two attorneys who led the case later resigned after being told they would be fired, according to Bloomberg.

But it turns out that the SEC’s fears that Debt Box executives were preparing to flee the country with investors’ assets may have been justified.

Alleged kidnapping

In early June, according to a police report obtained by Fortune, an officer in Draper, Utah, was assigned to investigate the reported kidnapping of Jason Anderson. He spoke with the victim’s brother, Jacob, who said Jason had gone to Dubai for a business meeting on March 1. When he tried to leave the country, his passport was confiscated and he was taken to a back room by airport staff.

He was then taken four hours away and placed in a hotel room that was locked from the outside, according to his brother. Anderson’s two business partners, Schad Brannon and Roydon Nelson, allegedly “mentally tortured” him for two weeks (the report does not provide further details) until he agreed to sign the Debt Box and approximately $400 million, confirming that he owed another $90 million to “people” in Dubai. Anderson only managed to get a message to his brother via an internet-connected TV remote control, and because he did not have a passport, he was unable to leave the country.

Anderson’s extraordinary story, as detailed in the report, contains some notable gaps. First, the officer notes that the FBI field office in Salt Lake City told him that agents in Dubai were already aware of the situation. According to the FBI, Dubai police had previously visited Jason Anderson at his hotel, where there was no sign of a kidnapping. The U.S. embassy in Dubai was also aware of the situation and advised Anderson on how to obtain a new passport; but the FBI also confirmed that there was an active criminal case in Dubai preventing Anderson from leaving the country.

Jason Anderson also continued to appear in interviews on YouTube in late June, three months after the alleged kidnapping, in which he discussed plans to relaunch Debt Box, further raising suspicions that he is being held against his will in Dubai.

The U.S. Attorney’s Office in Utah and the U.S. Embassy in Dubai did not respond to a request for comment from Fortune. An attorney representing Brannon and Nelson told Fortune that their clients were not aware of a police report filed by Jacob Anderson and denied any allegations of kidnapping. Brannon and Nelson hold senior positions at Debt Box, with Brannon serving as president and Nelson holding various titles, including executive, reflecting an ongoing business dispute among the company’s top executives.

According to another associate who spoke to Fortune on condition of anonymity to discuss an ongoing legal case, Jacob Anderson continues to insist that his brother has been kidnapped and his money frozen, an ongoing point of contention among the network of defendants. Jacob Anderson also contacted the US embassy in Abu Dhabi with similar details, including that his brother was set to meet with members of the “Royal Family,” according to an email seen by Fortune.

With the SEC dropping the Debt Box case after a judge’s rebuke, the story appears to reinforce the worst fears in the Wild West industry, at least for now—and this time, there’s no sheriff. A spokesperson for the agency declined to comment.

This story was first published on Fortune.com