The U.S. Securities and exchange commission faced embarrassing comments from a federal judge in Utah on December 1, 2023 in a case involving mishandling of assets worth millions of dollars belonging to a crypto company. This marks a series of legal setbacks the agency has faced in the last 365 days, the biggest of which is the XRP lawsuit verdict delivered in July 2023. In 2023 alone, the Debt Box debacle becomes the third such setback for the Commission.
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US SEC Faces Sanctions Threat
Earlier, CoinGape reported that a federal judge heavily criticized the alleged misrepresentation of facts by the Commission in its attempt to get a temporary restraining order for freezing funds belonging to crypto firm Debt Box. In the court order, the judge mentioned that the Commission made “materially false and misleading representations” to freeze millions of dollars worth of assets belonging to the company. With this, the SEC attorneys face the danger of getting sanctioned by the Utah court.
Prior to this, the SEC was severely criticized for its actions against crypto companies in several court proceedings. Here are some of the court comments against the SEC in recent times, as described by Stuart Alderoty, Chief Legal Officer of Ripple as a “troubling pattern.”
July 12, 2022
In the Ripple Vs SEC lawsuit, the court said the SEC “demonstrated hypocrisy” by making inconsistent arguments to the Court. This comes in close parallel with the December 1, 2023 Debt Box case proceedings in which the judge said the SEC misled the court leading to irreparable harm to the company. In the Ripple lawsuit proceeding, the court also said the SEC was not acting out of a faithful allegiance to the law.
June 6, 2023
In response to crypto exchange Coinbase’s appeal to compel the US SEC to react to its petition on crypto rulemaking, the Court sided with the exchange stating that “the SEC defaulted on its duty to respond in good faith” to the petition.
August 29, 2023
The US Court of Appeals for the District of Columbia Circuit gave Grayscale a win against the SEC in the lawsuit over converting the Grayscale Bitcoin Trust to a spot Bitcoin ETF. By rejecting the Grayscale application, the SEC was involved in “inconsistent treatment of similar products” and added the the SEC officials were acting in an “arbitrary and capricious” manner.
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