Judge Shelby criticized the SEC for using its agency status to justify its actions, creating inaccurate and false interference.

U.S. District Judge Robert Shelby on Monday imposed sanctions on the U.S. Securities and Exchange Commission (SEC) in response to allegations of serious misconduct in a legal proceeding against Utah-based cryptocurrency company DEBT Box.

The decision came after a judge found the SEC "grossly abused its authority" in handling the case.

SEC severe sanctions

In Monday's ruling, Judge Shelby ruled that the SEC committed a "serious abuse of power" in its handling of the case. Previously, the defendants accused the SEC of misrepresenting key facts to obtain a temporary restraining order freezing the crypto platform’s assets.

Judge Shelby ordered the SEC to explain its actions after DEBT Box's attorneys challenged the SEC's actions. The agency later acknowledged the error but urged the judge not to issue a formal penalty.

However, in Monday's ruling, Judge Shelby rejected the SEC's request, highlighting multiple instances of "bad faith" conduct. He held the agency accountable for its actions, noting that the SEC had "seriously undermined the integrity of these proceedings and the judicial process."

Judge Shelby's 80-page ruling imposes sanctions on the SEC, requiring the agency to pay DEBT Box's attorneys' fees and expenses related to the restraining order. The judge denied the regulator's motion to dismiss the case without charge, which would have allowed the agency to refile the case at a later date.

DEBT Box faced SEC legal action in July after being accused of defrauding investors of nearly $50 million by selling unregistered securities. The regulator's actions include requesting an ex parte temporary restraining order usually reserved for cases where there is a risk of evidence destruction or flight from the country. This comes after the SEC claimed that DEBT Box was closing bank accounts and planning to leave the United States.

Shelby Judge Questions SEC's Integrity

After initially granting the SEC's request, Judge Shelby later questioned the accuracy of the agency's information, prompting him to request evidence. In December, the regulator admitted the error and enforcement chief Gurbir Grewal apologized for the oversight.

However, the agency sought to avoid sanctions, rebutting accusations of bad faith. In January, the SEC tried to dismiss the case, insisting the sanctions were inappropriate.

In his ruling, Judge Shelby criticized the SEC's reliance on its status as a federal agency to justify its actions, particularly when seeking restraining orders. Shelby expressed concern about the confusion caused by the SEC's initial order. He also noted that the SEC not only repeated factual inaccuracies but also introduced new false information in subsequent statements to the court.

Shelby emphasized that these issues cannot be dismissed as simple unintentional errors. He concluded that the SEC's legal team made a deliberate strategic choice to provide false information, knowing that if it did not do so, it would be unable to obtain a restraining order and asset freeze. #SEC #债务箱案