- Two US Securities and Exchange Commission (SEC) lawyers handling the Debt Box case just tendered their resignation.
- Their exit came after the judge saw through the regulator’s deceitful statements in court and power trip in handling the cryptocurrency company’s lawsuit.
Key Resignations in the SEC Vs. Debt Box Case
The US Securities and Exchange Commission finally got what was coming to them when the presiding judge in the case it filed against Digital Licensing Inc., also known as Debt Box, called out the regulator for its “gross abuse of power.” Following the agency’s major setback, at least two SEC lawyers have relinquished their posts.
According to reports, the lawyers in question were Michael Welsh and Joseph Watkins. Citing sources familiar with the matter, the two were forced by an unnamed SEC official to vacate their positions to save face amid the fiasco since clinging on to their jobs longer would still lead to their termination anyway.
Welsh served as the lead attorney in the lawsuit against Debt Box. Meanwhile, Watkins was an investigative attorney whose findings became the cornerstone of the supposed merits of the case, which the SEC argued in court.
Things took a sour turn for the SEC though when Utah District Judge Robert Shelby discovered that the government watchdog acted in “bad faith” as the “critical evidence” submitted in court “lacked any basis.” What’s worse was that the documents were used to advance the case through “deliberately false and misleading ways” based on the wordings of the 80-page comment the judge penned last March.
“The Commission’s above-discussed conduct constitutes a gross abuse of the power entrusted to it by Congress and substantially undermined the integrity of these proceedings and the judicial process,” Shelby chastised the SEC in the court filing.
Like a cornered rat, the SEC admitted to its deception and tried to wriggle its way out of the predicament it found its way in by asking the court for leniency. However, the judge was firm in his ruling, which awarded compensation for attorney’s fees in favor of Debt Box. The sanction included the reimbursement of other expenses incurred by the defendant during the course of its restraining order and the passage of the lawsuit in court.
Issues of the Case
The lawsuit stemmed from the alleged fraudulent activities of Debt Box in the way it handled $49 million worth of investors’ money. The court initially sided with the SEC in the earlier phase of the process and gave in to the regulator’s request to have the defendant’s assets frozen.
Later, Shelby reversed his stance and penalized the plaintiff for its “materially false and misleading representations.”