I hope you are all well and having an excellent week, welcome to CryptoGod-1’s blog on all things crypto. I recently did a write up titled "SEC Withdraw Case Against Crypto Startup DEBT." A group of Republican senators have since criticised United States Securities and Exchange Commission (SEC) Chair Gary Gensler over the federal agency’s “unethical” handling of the DEBT Box case.
Republican Senators Call SEC Tactics Unethical
There has been a letter sent by a group of Republican senators towards the United States Securities and Exchange Commission (SEC) Chair Gary Gensler and how his department handled the recent DEBT Box case. The letter was dated the 7th of February and was signed by Senators Cynthia Lummis (R-WY), Bill Haggerty (R-TN), Thom Tillis (R-NC), JD Vance (R-OH), and Katie Boyd Britt (R-AL).
They made their feelings clear within the letter, noting how the SEC botched its case against DEBT Box after the federal agency accused the software firm of defrauding investors of $49 million. This case helped to crash DEBT Box's native token by more than 56%, and shut down DEBT Box in the process. This happened due to restraining orders and frozen accounts and assets. The Senators noted in their letter:
“We are greatly concerned by the Commission’s conduct in this case. It is unconscionable that any federal agency—especially one regularly involved in highly consequential legal procedures and one that, under your leadership, has often pursued its regulatory mission through enforcement actions rather than rulemakings—could operate in such an unethical and unprofessional manner.”
In January 2024 the SEC dismissed its lawsuit against DEBT Box without prejudice after it was revealed the SEC had presented several representations against DEBT Box that were deemed false and misleading. The Senators also noted how other cases brought the the SEC may also require more scrutiny to ensure there are no further misrepresentations in their enforcement operations.
Back in December 2023 the SEC's lawyers apologised for their conduct while also stating that they would conduct “mandatory training” on the “duty of accuracy and candour” going forward. As part of that apology from a December 21st court filing, the document read:
“The Commission takes this Court’s concerns seriously and deeply regrets these errors. Agency officials are taking steps to ensure those errors are not repeated in this action or other proceedings.”
As noted in the tweet below, the actions of the SEC involved requesting Judge Shelby to impose emergency restraining orders and the freezing of multiple business assets. This was achieved with false and misrepresented facts and was done to ensure the opposition could not defend themselves.
The latest development with the Republican Senators penning a letter shows that they are extremely sceptical over the proposed reforms and changes for the agency. The SEC’s new mandatory training is not deemed sufficient according to the letter, and an emphasis on the basics of legal conduct would be more appropriate. They also outlined how serious the allegations outlined by the Court are for the agency.
The SEC has been involved in a number of controversial legal battles under Gensler’s direction and he has often faced criticism for its “ruling-by-enforcement” approach. Other high profile civil lawsuits brought by the federal agency against crypto-related firms in recent times includes the likes of crypto exchanges COINBASE and Binance.
Trust in the organisation by the public, who must have well-placed confidence in the Commission’s enforcement actions, has been undermined by the latest developments. The professionalism of the SEC along with them compromising their mission through examples such as DEBT Box will do little to instil renewed confidence and Gensler is walking a tight line.
Have a great day.
CryptoGod-1.
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