SEC Condemned to Pay $1.8 Million for “Bad Faith” in Debt Box Case

Is the tide turning against the Securities and Exchange Commission (SEC)? The U.S. financial regulator has been hit with a hefty fine in the Debt Box case. What exactly are the accusations against the SEC?

SEC in Trouble Over Debt Box

To recap, the SEC accused Debt Box of selling “node licenses” without prior authorization, alleging the company profited by $49 million. Following this, the SEC froze the company’s assets, which incited the ire of Judge Robert Shelby. He called it a “blatant abuse of power”: “[The SEC] has deliberately propagated lies. […] It should not be allowed to continue presenting fallacious arguments.”

This case already led to the resignation of two SEC lawyers who were forced to leave under threat of dismissal. Subsequently, Debt Box demanded compensation from the SEC, as the company was forced to cease its operations and spend substantial amounts on its defense.

A $1.8 Million Fine

The consequence for the SEC is a fine set at $1.8 million. The judge based his decision on a previous ruling that established the financial watchdog acted “in bad faith.”

In total, the SEC must cover all of Debt Box’s legal fees and other related expenses. Additionally, the current complaint is dismissed, and any new action by the SEC must be approved by Judge Shelby before being accepted.

This represents a significant blow to the SEC, underscoring that its powers are not and should not be omnipotent. Freezing a company’s assets is reserved for the most severe cases, and in the Debt Box affair, the action was deemed particularly excessive.

Is the SEC’s Dominance Over Crypto Fading?

This isn’t the first time the SEC has faced a judge’s wrath over its actions against crypto companies. Several commentators have noted that its procedures are sometimes rushed. There are indications that a shift may be occurring in the U.S.

Cryptocurrencies have indeed become a campaign issue across the Atlantic. As Republicans, particularly Donald Trump, praise them, Democrats are compelled to soften their stance. There are even local rumors suggesting that Ethereum ETFs were hastily approved.

The SEC’s reign over cryptocurrencies may be coming to an end, or at least its stance could become more lenient. This would be welcome news for the U.S. crypto ecosystem, which has been heavily pressured in recent years.