Several Republican senators criticized the Securities and Exchange Commission (SEC) on Wednesday for its “deeply troubling” behavior in the recent case against cryptocurrency company DEBT Box.
The Securities and Exchange Commission filed the case against DEBT Box in July, accusing the company of a “perpetual and sprawling fraudulent securities offering” that defrauded investors of at least $49 million.
The federal judge overseeing the case granted the agency's request for a temporary restraining order freezing DEBT Box's assets after the SEC suggested that individuals associated with the company “were currently in the process of attempting to move assets and investor funds offshore.”
However, the judge reversed his decision in late November, expressing concerns that the SEC had “made materially false and misleading statements” that would “undermine the fairness of the proceedings.”
The SEC acknowledged in December that one of its lawyers made a statement at a July hearing that it said was “inaccurate, without his knowledge at the time,” and that its lawyers “failed to correct that statement when they learned of the inaccuracy.” The agency filed a motion to dismiss the case last week.
In a letter to SEC Chairman Gary Gensler on Wednesday, Sens. J.D. Vance (R-Ohio), Thom Tillis (R-North Carolina), Bill Hagerty (R-Tenn.), and Cynthia Lummis (R-Wyoming) And Katie Britt. (R-Ala.) expressed concerns about the agency's conduct.
“It is unconscionable that any Federal agency — especially one that is regularly involved in significant legal proceedings, and which, under your leadership, has often pursued its regulatory mission through enforcement actions rather than rulemaking — could operate in such an unethical and unprofessional manner.” The senators wrote.
They added: “That the committee’s lawyers are not familiar with the relevant facts of the case, and that the committee’s lawyers do not care much about the veracity of the evidence presented to the court, is very disturbing.”
The senators also asked whether other enforcement cases brought by the SEC should be examined in light of its recent actions.
“It is difficult to maintain confidence that other cases are not based on questionable evidence, confusion, or outright misrepresentations,” they wrote.
The senators later added: “The public should have great confidence in the committee’s enforcement actions, its motivations for taking them, and its professionalism in carrying them out.” “That trust and your mission have been undermined by episodes like the DEBT Box case.”
The Hill has reached out to the SEC for comment.
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