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Federal Judge Slams SEC for ‘Gross Abuse of Power’ in Blockchain Firm Case

By  |  March 19, 2024

In a scathing rebuke of the Securities and Exchange Commission (SEC), Chief District Judge Robert Shelby denounced the regulatory body for what he termed a “gross abuse of power entrusted to it by Congress.” The case in question involves the SEC’s dispute with Digital Licensing, operating under the name DEBT Box, a blockchain technology firm.

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    The SEC had initiated legal action against DEBT Box in July of last year, alleging fraudulent activities resulting in investor losses amounting to nearly $50 million. However, Judge Shelby’s recent ruling challenges the SEC’s tactics and motivations in the case.

    On Monday, Judge Shelby accused the SEC of acting in “bad faith” and intentionally propagating falsehoods to secure an asset freeze and temporary restraining order against DEBT Box. The judge’s criticism didn’t stop there, as he further sanctioned the SEC, directing it to cover the attorneys’ fees and legal costs incurred by DEBT Box.

    Read more: House GOP Crypto Bill Lays Out SEC And CFTC Roles

    However, Judge Shelby made a point to clarify that his ruling doesn’t offer any opinions on the underlying merits of the case against DEBT Box. Instead, his focus was solely on the misconduct exhibited by the regulatory body.

    This verdict comes at a time when the SEC, under the leadership of Chair Gary Gensler, faces mounting criticism for its handling of cryptocurrency-related cases. Gensler, known for his skepticism towards the industry, has often been accused of employing an overly aggressive approach when dealing with crypto firms.

    The ruling by Judge Shelby serves as a stark reminder of the importance of fair and just regulatory practices, particularly in emerging sectors like blockchain and cryptocurrency. It underscores the need for regulatory bodies to exercise their authority responsibly, avoiding overreach and ensuring due process for all parties involved.

    Source: Reuters