Debt Box Challenges SEC’s Attempted Dismissal in Fraud Case: Alleges Strategic Maneuvering

Debt Box Challenges SEC’s Attempted Dismissal in Fraud Case: Alleges Strategic Maneuvering

Crypto News – Software company Debt Box is urging a federal judge in Utah to reject the United States Securities and Exchange Commission‘s (SEC) motion to dismiss a contentious enforcement action filed against it.

In a filing dated February 14, Debt Box portrayed the SEC’s motion as a strategic ploy to avoid potential sanctions and a permanent dismissal stemming from alleged misconduct.

The SEC filed a motion to dismiss its case against Debt Box on January 30, stating its intention to review the evidence and understand the factors that may have led its legal representatives to initially make inaccurate statements to the court.

However, Debt Box contends that the SEC’s eagerness to dismiss the case without prejudice is a tactical maneuver aimed at sidestepping sanctions and potentially initiating a revised version of the enforcement action, free from allegations of misconduct:

“The SEC seeks to terminate this action on its own terms while retaining the option to refile another enforcement action against the Debt Box defendants and others at an unspecified future time, possibly in a different venue — as though nothing transpired in this case, when indeed it did.”

Debt Box alleges that the SEC’s move to dismiss is an endeavor to secure preferential treatment in federal courts over entities it regulates. It underscores the SEC’s dissatisfaction with mere pledges to reorganize teams or provide additional ethics training when companies are accused of deceiving investors.

The filing comes in the wake of the SEC’s acknowledgment in late December 2023 of making inaccurate statements to the court earlier in the case. Judge Robert Shelby had previously rebuked the SEC’s attorneys and instructed the agency to clarify the “false or misleading” statements regarding the company’s purported intention to relocate assets overseas to evade regulatory jurisdiction.

However, Shelby determined that the SEC had misrepresented the circumstances. In response to a court order, the regulatory body changed its legal representation, committed to internal training, and sought a temporary dismissal for an internal review.

Debt Box has also requested that the scheduled hearing on March 7 proceed as planned despite the SEC’s request for its cancellation.

In the initial phases of the case against Debt Box and its promoters, the SEC obtained emergency measures, alleging that the software company had defrauded investors of at least $50 million by selling unregistered securities in the form of software licenses claiming to mine digital assets linked to real-world industries.

On August 3, 2023, the SEC secured a temporary restraining order to freeze Debt Box’s assets, asserting that the company would remove evidence and covertly transfer assets overseas if notified of the impending order.