Utah’s top judge threatens SEC lawyers with sanctions over ‘misrepresentations’ in crypto case
The Securities and Exchange Commission (SEC) has been ordered by Utah’s top federal judge to explain statements made over the course of its efforts to implement and maintain a temporary restraining order (TRO) against crypto firm DEBT Box , a new court filing shows.
The TRO was dissolved in October after Judge Robert J. Shelby, Chief United States district judge for the District of Utah, found several of the SEC’s statements arguing for the order to be “false or misleading.”
The SEC claimed at the time that DEBT Box was actively in the process of moving assets overseas in order to escape the SEC’s jurisdiction, closing bank accounts in June 2023 in order to “move investor funds” overseas to the United Arab Emirates “for the express purpose of evading the federal securities laws.”
In an additional detailed filing explaining his order, Shelby explained that the SEC’s claim during a July 28th hearing on the TRO that the defendants had closed 33 bank accounts in the past 48 hours constituted “the most significant evidence” that DEBT Box was attempting to move funds overseas. That evidence, along with statements made by the SEC that the defendants were blocking investigators from viewing certain social media pages, helped convince the judge to approve the TRO.
However, in a motion to dissolve the TRO filed in September, the defendants argued that, in fact, zero bank accounts were closed in June or July 2023. Rather, the thirteen of the defendants’ bank accounts that had been closed had all been closed on or before January 2023 — and nine of the accounts were closed by banks, not the defendants.
“There was no evidence that any bank accounts closed in the 48 hours preceding the ex parte hearing,” Shelby wrote in his filing.
