SEC's application for a temporary restraining order is deceptive? Utah judge criticizes SEC for false statements

The SEC's previous enforcement action successfully uncovered the sale of false "node licenses" by a mining company. However, a Utah federal judge reviewing the case pointed out that the SEC may have violated administrative procedures by obtaining a temporary restraining order and freezing the company's assets through a large number of false statements.

Cryptocurrency mining company Digital Licensing sued by the SEC for a $50 million fraud case

SEC Successfully Catches Mining Enterprise Digital Licensing DEBT Box

In August, the SEC sued DEBT and froze related assets, accusing them of selling "node licenses" in the form of unregistered securities, falsely claiming that agents could earn huge profits from mining, when in fact, they were not involved in any mining operations at all. The amount involved in the case exceeded $50 million.

SEC Applies for One-Sided Asset Freeze

A press release from the SEC at the time stated that they had successfully applied for a temporary restraining order and asset freeze against DEBT through the Utah District Court.

The SEC's execution of the one-sided ex parte application means that the court makes a temporary decision on a request from one party without the other party's knowledge, preventing them from opposing or defending against it.

Usually, this is approved by the court when there is a potential risk of evidence tampering or asset transfer.

Utah District Court Criticizes SEC

Utah District Judge Robert Shelby stated that he approved the application because SEC lawyers claimed that DEBT was actively closing bank accounts, but later found that this was not the case:

1. SEC Claims DEBT Box Closed 33 Bank Accounts Within 48 Hours

In reality, DEBT did not close any bank accounts in the past 48 hours, and most of their business had shifted overseas in the previous months. Some accounts were closed by the banks, not by DEBT.

2. SEC Claims DEBT Box Conducting International Wire Transfers, Requests Asset Freeze

The $720,000 overseas transfer mentioned by the SEC was, in fact, a domestic transfer.

3. SEC Accuses DEBT Box of Preventing Investigators from Viewing Social Platforms

Judge Robert Shelby pointed out that DEBT was not even aware of the SEC investigation beforehand.

Concerns About SEC Disrupting Judicial Proceedings

Robert Shelby expressed confusion over the false statements made by the SEC and the presence of another lawyer and two investigators during the application, without clarifying the lawyer's incorrect statements.

Robert Shelby believes that the SEC may be in violation of Rule 11(b) of the Federal Rules of Civil Procedure, which requires the SEC to respond within a time limit regarding obvious false statements.

An SEC spokesperson stated that they had received the order and would respond in accordance with the court's instructions.

The SEC will have two weeks to reply to Robert Shelby.