Letter to SEC Chairman
On the 7th, four U.S. senators, including Rep. Cynthia Lummis, who is known as a supporter of crypto assets (virtual currencies), sent a letter to U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler, stating that the crypto company DEBT We expressed strong concern about the commission's inappropriate conduct in the Box case.
Lawmakers said the SEC's handling of the incident undermined “the SEC's mission to protect investors and maintain fair, orderly, and efficient markets.” He also criticized the move as a betrayal of the public's trust in the SEC's enforcement activities.
In December of last year, the SEC admitted that it had made inaccurate statements in the lawsuit and apologized. At the end of January, the company notified the federal district court that it will file a motion to dismiss the lawsuit.
connection:U.S. SEC files motion to dismiss virtual currency company DEBT Box lawsuit as “unjustified and not based on facts”
However, the SEC is asking for the lawsuit against DEBT Box to be dismissed “without prejudice” (“dismiss without prejudice”), so if the SEC's request is granted, the defendants will be re-indicted at a later date. There remains the possibility of doing so.
In their letter, the lawmakers question the ethics of the SEC and strongly criticize it.
Any federal agency, especially one that regularly engages in legal proceedings with extremely high consequences and, under your leadership, often pursues its regulatory mission through enforcement action rather than rulemaking. It is simply unacceptable for an institution to operate in such an unethical and unprofessional manner.
History of the trial
In July of last year, the SEC filed a lawsuit alleging that DEBT Box defrauded thousands of investors of more than $49 million by selling unregistered securities called “node licenses.” A petition was filed in the U.S. District Court for the District of Utah seeking a temporary restraining order (TRO) against the company.
The court accepted the SEC's argument and issued a TRO freezing DEBT Box's assets, but in September the defendants filed a motion to revoke the TRO. The court concluded that the TRO was inadvertently issued because the SEC failed to show that failure to issue the TRO would cause “irreparable harm,” and the court revoked the TRO in October.
Subsequently, in a December court order, the district court judge requested an explanation from the SEC, stating that the SEC “made materially false and misleading statements that undermined the integrity of the proceedings” regarding the TRO application. He warned that sanctions could be imposed.
In response to the court order, the SEC acknowledged its mistake and apologized, but maintained that the court's sanctions were “not appropriate and unnecessary.”
In a court filing last December, the SEC said that during deliberations in July, the commission's lawyers “made statements that, unknown to us at the time, were inaccurate” and that “the content of those statements was inaccurate.” Even after it was discovered that the information was inaccurate, he failed to correct it.''
Lawmakers, on the other hand, criticized the SEC's explanation, saying that the mistake “suggests negligence rather than malice, but we cannot accept even such a 'lenient explanation.'”
It is extremely troubling that the committee's legal team was not familiar with the relevant facts of this case and downplayed the credibility of the evidence submitted to the court.
Lawmakers said that regardless of whether SEC officials intentionally misrepresented evidence or unknowingly presented false information in this case, this case brings scrutiny to other instances of enforcement brought by the SEC. He emphasized that this suggests that there is a possibility that this will be necessary.
The American Securities Association also criticized
The American Securities Association (ASA), a trade group for regional financial services companies, also criticized the SEC's response in the DEBT Box case.
ASA Chief Executive Officer Chris Iacovera pointed out that the SEC Chairman holds the trust and confidence of the public and is expected by the American people to act with the highest standards of ethics and morals. . However, in this case, he criticized the actions that fell short of expectations.
Rather than uphold its standards, his agency intentionally misled federal courts in order to pursue a political agenda against an industry that the SEC did not like.