SEC Faces Major Setback in DEBT Box Crypto Case: Court Orders $1.8 Million Payment

SEC Ordered to Pay $1.8 Million in Legal Fees

The SEC has been dealt a significant blow in its case against Digital Licensing Inc., also known as DEBT Box. A federal judge has ordered the agency to pay approximately $1.8 million in legal fees. This ruling comes after the judge dismissed the case without prejudice, allowing the SEC to potentially reopen it in the future.

The SEC initially filed a complaint against DEBT Box in July 2023, accusing the company of defrauding investors of at least $49 million. The SEC claimed DEBT Box sold “node licenses” promising profits from cryptocurrency mining, which the agency alleged were never mined. This led to a temporary restraining order that froze DEBT Box’s assets and appointed a receiver to manage the company.

Court Criticizes SEC’s Conduct

In a March filing, Judge Robert Shelby criticized the SEC’s conduct in obtaining the temporary restraining order. The judge highlighted that the SEC had misled the court with false statements and misrepresentations. This prompted scrutiny over the agency’s actions. These news come after two SEC lawyers resigned back in April in the midst of court criticism over their conduct during a crypto case which involved making false statements and misrepresentations in its lawsuit against DEBT Box.

On May 28, Judge Shelby approved the SEC’s request to dismiss the case without prejudice. This decision allows the SEC to potentially bring a related case against DEBT Box in the future. The SEC argued that dismissal without prejudice would protect investors and the public interest without causing legal prejudice to the defendants.

In a subsequent order, the judge ruled that the SEC must pay the legal fees incurred by DEBT Box during the legal battle. “In this Order, the court ensures the final amount of fees requested by Defendants and the Receiver is reasonable,” the filing stated. This decision is seen as a significant move towards justice and transparency.

DEBT Box’s Response and the SEC’s Admission of Fault

Following the court’s decision, DEBT Box expressed satisfaction with the outcome. In a statement on X, the company said, “This is a significant step towards justice and transparency. The case is closed, and any future action by the SEC would have to go through Judge Shelby.”

The SEC has acknowledged its mistakes in the case. In December, the agency admitted to making inaccurate statements, stating it “fell short” of the expectations to be accurate and candid in court. This admission further undermined the SEC’s position and credibility in the case.

Implications for Future Cases

This ruling has significant implications for the SEC and its approach to cryptocurrency regulation. The court’s decision to impose legal fees on the SEC highlights the importance of integrity and accuracy in legal proceedings. It also serves as a warning to regulatory bodies about the consequences of misleading the court.

The dismissal without prejudice means the SEC could bring a related case against DEBT Box in the future. However, any new action would need to address the court’s concerns about the SEC’s conduct. This case underscores the challenges regulators face in navigating the complex and rapidly evolving world of cryptocurrency.


The SEC’s case against DEBT Box has ended in a significant setback for the regulatory agency. With a federal judge ordering the SEC to pay $1.8 million in legal fees and the case dismissed without prejudice, the outcome serves as a reminder of the importance of honesty and diligence in legal proceedings. As the world of cryptocurrency continues to grow, this case highlights the need for regulators to adapt and uphold the highest standards of conduct.

Image courtesy of Jobba

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