DEBT Box urges judge to toss suit as SEC got case ‘badly wrong’

DEBT Box and other defendants in a Securities and Exchange Commission lawsuit want the case dismissed after the court found that the agency lied to obtain a temporary restraining order against them.

“The SEC was wrong in this case. Very bad,” lawyers for Digital Licensing Inc., which operates as DEBT Box, said Utah federal court Judge Robert Shelby in a Dec. 4 motion to dismiss. "The SEC should not be allowed to continue weaving a false narrative to avoid dismissal."

The SEC won a temporary restraint order to freeze DEBT Box assets on Aug. 3, claiming the company would suppress evidence and secretly transfer assets overseas if notified that the order would be imposed.

The agency accused the company of perpetrating a $50 million fraudulent crypto scheme. DEBT Box sold software mining licenses tied to real-world assets that the SEC said were unregistered securities. The defendants refute this assertion.

"These allegations are not only false, but they also fail to meet basic standards of allegation," he wrote in his latest motion.

A federal court in Utah invested asset freeze on Nov. 30 saying the SEC misrepresented evidence by claiming that DEBT Box closed bank accounts and intended to move to the United Arab Emirates and escape SEC jurisdiction.

The court found that the company did not close bank accounts and that a $720,000 transfer that the SEC supposedly sent overseas was actually sent domestically.

Excerpt from DEBT Box's motion to dismiss. Source: CourtListener

The SEC “misrepresents the state of the law regarding cryptoassets” in its “fatally erroneous statement,” DEBT Box said.

SEC Misrepresentation led to the issuance of a “show cause order” by Judge Shelby, requiring the regulator to provide reasons why it should not incur sanctions for its actions.

SEC's 'Shocking' Behavior Deserves Punishment, Ripple Execs Say

Ripple CTO David Schwartz said the SEC's behavior is "shocking."

"The SEC went to a judge to seek an emergency order to paralyze several companies and blatantly misrepresented the facts to obtain it before anyone on the other side could defend themselves," he said. saying in a post X (Twitter) on December 5.

Related: 'We Had to Change Strategy,' SEC Enforcement Director Says of Recent Actions: Report

Pro-Ripple lawyer John Deaton hopes the regulator will be forced to pay for the damage caused to DEBT Box.

DEBT Box's four directors (Jason Anderson, his brother Jacob Anderson, Schad Brannon and Roydon Nelson) and 13 others were named in the SEC action.

Magazine: Crypto Regulation: Does SEC Chairman Gary Gensler Have the Last Word?