U.S. District Judge Robert Shelby issued a stern warning to Securities and Exchange Commission (SEC) lawyers, signaling potential sanctions for misleading statements in a lawsuit against a leading cryptocurrency company known as DEBT Box.

The SEC filed a lawsuit against DEBT Box in Utah federal court, alleging that the company defrauded investors of approximately $50 million through the sale of unregistered securities called "node licenses."

However, Judge Shelby's decision revealed significant inconsistencies in the SEC's case.

Expressing concern for the SEC attorneys, Judge Shelby suggested that the actions of other team members in distorting the facts and failing to correct those errors may have violated federal court Rule 11(b), which requires factual allegations based on evidence.

This development marks an important moment in the legal process, shedding light on the complexity of cryptocurrency regulations and highlighting the importance of legal accountability in high-stakes financial cases.

Ripple lawyer John E. Deaton stated that he was not surprised by the SEC's alleged lack of integrity, suggesting that the agency's lawyers may have personal biases in cryptocurrency cases.

Deaton called for an injunction against the financial regulator.