SEC Battles to Dismiss Case Against Debt Box Without Prejudice Amid Firm's Resistance
Summary:
The US Securities and Exchange Commission (SEC) is in a legal wrangle with crypto mining software company Digital Licensing, also known as Debt Box. The SEC aims to dismiss its case against Debt Box without prejudice, which would allow it to sue in the future. Debt Box, however, views this as a dodge to a permanent dismissal. Moreover, Debt Box has mandated that if the case is dismissed without prejudice, the SEC must comply with 11 conditions if it decides to refile the case.
The US Securities and Exchange Commission (SEC) continues its legal battle against crypto mining software company Digital Licensing, known also as Debt Box, with an aim to have its case against the firm dismissed without prejudice. By doing so, the SEC could pursue legal action against Debt Box in the future. The SEC's first attempt fell flat as the U.S. District Court for Utah Northern Division shamed the SEC for gross misuse of power, and dismissed their motion to remove the case without prejudice whilst insisting that Debt Box should get a refund for the legal costs incurred. Not wanting a dismissal without prejudice, Debt Box dubbed it as a strategy to evade a permanent removal. The SEC’s supporting reply insisted that their request for dismissal without any prejudice would favor Debt Box investors, and previous legal instances lend proof that such requests from plaintiffs are common. The SEC statement said: “We're asking for dismissal without prejudice to give our newly assigned lawyers the opportunity to thoroughly scrutinize the case file and decide whether to proceed with a fresh complaint after further investigation.” The SEC’s chief counsels on this case stepped down after the agency faced court-imposed sanctions. Should the court decide to dismiss the case without prejudice, Debt Box has imposed 11 terms to be met by the SEC in the event it reopens a case. The SEC has partially or completely accepted most of these conditions. A key stipulation was a Wells notice — a formal warning from SEC about potential charges — and completion of probe files, with limitations on the information provided by the SEC alongside the notice. Meanwhile, an opposing condition requested that the SEC should share all subpoenaed material in the case with Debt Box and have a representative present at unsolicited interviews during the investigation. Additionally, the SEC resisted a condition to share exonerating evidence, which could work in the defendant's favour, as part of its investigation. Debt Box faces allegations of swindling investors of $50 million and trading unregistered securities through software licensing for crypto mining. The SEC had earlier suspended the company's assets temporarily in August, an action which triggered court-sanctions when it was found that the SEC had wrongly justified it based on a misleading storyline regarding the company's alleged plans to move overseas. In response, the SEC expressed deep remorse.
Published At
5/15/2024 12:33:08 AM
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