DEBT Box has petitioned a federal judge to dismiss a recent motion filed by the Securities and Exchange Commission ( SEC ) seeking to dismiss its case against the cryptocurrency project, alleging that the federal agency's offer is an attempt to hide "violations" which is serious.
Responding to threats of sanctions following the alleged violations, the SEC last month asked the court to dismiss the case without prejudice. The measure, if approved, would allow the agency to refile charges against the defendants in the future.
The legal saga began in August 2023 when the SEC sued Digital Licensing Inc., which operates as DEBT Box. Subsequently, SEC attorneys obtained a temporary restraining order (TRO) against the defendants after making what Judge Robert Shelby later called “misleading” statements to the court.
Faced with the possibility of sanctions, the SEC acknowledged that its attorneys should have been more transparent with the court but denied the need for sanctions. Instead, the agency proposed that the court grant its motion to dismiss without prejudice.
DEBT Box opposed the SEC's move, accusing the agency of seeking to exit the case on its own terms while retaining the option to refile charges against the defendants in the future. The company's lawyers filed an opposition motion, opposing the SEC's proposal.
According to the defendants, the TRO, which was initially granted in August and later extended several times, effectively halted DEBT Box's operations. The company claims this resulted in significant disruption for more than 300,000 users in 130 countries, with its native token plummeting by more than 56%.
The defendants, identified as Jason Anderson, Jacob Anderson, Schad Brannon, and Roydon Nelson, collectively referred to as the “DEBT Board,” asserted that the TRO froze their personal and business assets, which led to a variety of challenges, including difficulties in paying employees and loan cancellation. Additionally, they noted instances where credit card companies and banks refused to engage with them.
In its filing, the defense team criticized the SEC for seeking preferential treatment in federal court compared to individuals or entities it regulates. They argue that when suspicions arise regarding false or misleading statements in the securities markets, the SEC will typically file charges under anti-fraud provisions, and seek significant sanctions.
Additionally, the defendants urged the judge to stay the hearing scheduled for March 7, which the SEC had previously asked to be canceled. This shows that there is continued encouragement from both parties to complete the legal process in a timely manner.
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