Federal Judge Orders SEC to Explain Misleading Evidence in DEBT Box Case

According to Blockworks, a federal judge has ordered the US Securities and Exchange Commission (SEC) to explain why its attorneys should not be sanctioned for presenting false and misleading evidence in the DEBT Box case. In July 2023, the SEC accused Digital Licensing, operating under the name DEBT Box, of offering an unregistered security and defrauding investors of at least $49 million. The SEC's legal team claimed the defendants were attempting to move assets and investor funds overseas, citing bank statements and account closures as evidence. This led to the granting of a temporary restraining order (TRO) to freeze the company's assets. However, two groups of defendants and relief defendants moved to dissolve the TRO in September, claiming the SEC had misled the court in their initial application. The SEC then tacitly acknowledged that no bank accounts were closed in July 2023 and that the accounts that were closed were shut down by the banks, not the defendants. The TRO was dissolved in October 2023. The SEC has received the order and will respond to the court as directed, according to a spokesperson.