The United States Securities and Exchange Commission (SEC) has taken a new step in its efforts to dismiss the case against cryptocurrency mining software firm Digital Licensing, also known as Debt Box. The SEC filed a reply to its motion to dismiss the case without prejudice, which would allow the agency to sue Debt Box again in the future.
The U.S. District Court for Utah Northern Division had previously sanctioned the SEC for what it deemed a “gross abuse of power” and dismissed the agency’s initial attempt to have the case dismissed without prejudice. The court also ruled that Debt Box should be reimbursed for its legal fees. However, Debt Box requested that the case not be dismissed without prejudice, claiming that it was a tactic to avoid permanent dismissal.
In support of its motion, the SEC argued that granting dismissal without prejudice would be in the best interests of Debt Box investors, citing precedent that suggests the court should normally grant a plaintiff’s request for dismissal without prejudice. The SEC’s lead attorneys in the case resigned following the court’s sanctions.
If the case were to be dismissed without prejudice, Debt Box proposed 11 conditions that the SEC would have to adhere to if it decided to refile the case. The SEC agreed, either fully or partially, to most of these conditions. One condition was the issuance of a Wells notice, which is a warning from the SEC indicating its intention to bring charges, as well as the completion of investigation files. However, the SEC sought to limit the information it would provide with the notice.
Debt Box is accused of defrauding investors of $50 million and selling unregistered securities in the form of software licenses for mining digital assets. In August, the SEC temporarily froze the company’s assets, a decision that led to the agency being sanctioned by the court for presenting a false narrative regarding the company’s alleged plans to relocate outside the U.S. The SEC expressed regret over its actions in this regard.
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