Poor performance at work led to dismissal by SEC? Bloomberg: Two lawyers in the Debt Box case have been forced to resign

Earlier in the court document, it was revealed that two U.S. Securities and Exchange Commission (SEC) lawyers responsible for the cryptocurrency company Debt Box fraud case were forced to resign for fabricating lies when applying for a temporary restraining order against the company. Additionally, the SEC was severely criticized by the judge in the case for "serious abuse of power" and was ordered to fully bear Debt Box's legal fees.

Review of the Debt Box Case

In August last year, the SEC released assets frozen from the cryptocurrency mining company Digital Licensing Inc. Debt Box, alleging that it sold unregistered securities through false "node licenses," falsely claiming to bring investors huge profits, and illegally profited over $50 million.

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

However, Judge Robert Shelby later found that the SEC attempted to obtain a temporary restraining order against the company in court through false evidence and misleading statements, criticizing the behavior as constituting "serious abuse of power" and damaging the integrity of the legal process.

Shelby also emphasized that the SEC must pay all legal fees for DEBT Box as a sanction against the SEC.

Resorting to all means for enforcement? SEC sanctioned by judge for presenting false evidence: deliberate deception, serious abuse of power

Two Lawyers in the Debt Box Case Forced to Resign

According to Bloomberg, it seems that the main lawyer Michael Welsh and investigative lawyer Joseph Watkins in the Debt Box case have been forced to resign or face dismissal due to the obstruction of the temporary restraining order against Debt Box.

At the same time, the SEC also indirectly confirmed this news in last week's court document:

Michael Welsh will no longer serve as counsel for the plaintiff SEC and will no longer be employed by the U.S. Securities and Exchange Commission, with a previous lawyer involved in the case taking over as plaintiff's counsel.

SEC Declines to Respond

It is understood that the SEC has not yet responded positively to this news.

In December last year, Gurbir Grewal, head of the SEC's enforcement division, apologized for this negligence, admitting that the team did not meet the required standards but still insisted that the sanction was "unreasonable."

However, the SEC actually filed a motion to unconditionally dismiss the lawsuit the following month in an attempt to settle the case, but was rejected by Judge Shelby.

Senators Suggest Reviewing Cases Handled by SEC

It is worth noting that several Republican senators wrote to SEC Chairman Gary Gensler in February raising concerns about the SEC's enforcement in an "unethical and unprofessional" manner and suggesting a review of other cases handled by the SEC.

To date, the DEBT Box case is still ongoing.