Debt Box, a software firm, is urging a federal judge in Utah to reject the United States Securities and Exchange Commission’s (SEC) attempt to dismiss a controversial enforcement action against them. In their filing on February 14, Debt Box accused the SEC of using this motion as a strategic maneuver to avoid potential sanctions and a complete dismissal due to alleged misconduct.
The SEC had submitted a motion on January 30 to dismiss their case against Debt Box, stating their intention to review the evidence and understand the reasons behind their legal representatives’ initial inaccurate statements to the court. However, Debt Box argues that the SEC’s eagerness to dismiss the case without prejudice is a calculated move to evade sanctions and potentially initiate a revised version of the enforcement action, free from allegations of misconduct.
Debt Box claims that the SEC’s attempt to dismiss is an effort to receive preferential treatment in federal courts when dealing with entities it regulates. They highlight the SEC’s dissatisfaction with superficial promises of restructuring teams or providing more ethics training when businesses are accused of misleading investors.
This filing comes after the SEC’s acknowledgment in late December 2023 that they had made inaccurate statements earlier in the case. Judge Robert Shelby had previously criticized the SEC’s lawyers and instructed them to clarify any “false or misleading” statements regarding Debt Box’s alleged attempt to relocate assets overseas to circumvent regulatory jurisdiction. However, Shelby found that the SEC had misrepresented the situation. In response to the court order, the regulator changed its legal representation, committed to internal training, and sought a temporary dismissal for an internal review.
Debt Box has also requested that the scheduled hearing on March 7 proceed as planned, despite the SEC’s request for cancellation.
In the early stages of the case against Debt Box and its promoters, the SEC obtained emergency measures, alleging that the software firm had defrauded investors of at least $50 million by selling unregistered securities in the form of software licenses claiming to mine digital assets tied to real-world industries. On August 3, 2023, the SEC successfully obtained a temporary restraining order to freeze Debt Box’s assets, citing concerns that the company would remove evidence and secretly transfer assets overseas if they were aware of the impending order.
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