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

The U.S. Securities and Exchange Commission (SEC) released a report yesterday regarding the freezing of assets of the cryptocurrency mining company Digital Licensing Inc., alleging that it sold unregistered securities through false "node licenses," falsely claiming to bring investors huge profits, with an amount involved exceeding 50 million US dollars. At the same time, it appears that SEC Chairman is shifting focus to other areas.

SEC Adds Another Enforcement Case

According to a press release by the SEC, Digital Licensing Inc. has been engaged in a fraudulent scheme since March 2021, selling unregistered securities through false "node licenses" and illicitly profiting approximately $50 million in funds, not including undisclosed amounts of Bitcoin and Ethereum.

It is understood that Digital Licensing Inc. is a digital asset management company operating under the name "DEBT Box."

The complaint alleges that DEBT Box and its principal almost entirely misrepresented all aspects of the business to investors, including being authorized to engage in cryptocurrency mining through "node licenses." In reality, it was all a fraud scheme, not a legitimate cryptocurrency mining operation.

They also utilized online videos and social media to lure and deceive investors, falsely claiming that investing in their cryptocurrency mining operation would yield various cryptocurrencies and generate substantial income.

SEC has taken enforcement action, and pursuant to court orders, has imposed temporary asset freezes, permanent injunctions, disgorgement of ill-gotten gains, among other relief measures against DEBT Box and 18 defendants involved, and designated a specific law firm as its temporary receiver to assess the asset situation.

Gary Gensler: Shifting Focus to Artificial Intelligence

However, according to Cryptoslate citing Bloomberg, SEC Chairman Gary Gensler seems to be planning to ease off consecutive blows to the crypto industry and gradually shift the agency's focus to other areas.

Gensler expressed his views on the explosive growth of artificial intelligence AI in recent years:

As artificial intelligence begins to automate many processes in the financial industry, without regulation, it could pose risks and have cascading effects on SEC oversight and the securities market worth tens of billions of dollars.

He added, "While AI's predictive capabilities can help companies better serve users, if problems arise, it could also be used to shift blame, as the current regulatory framework still lacks the capacity to manage or address these risks."

Gensler stated that he has previously focused on the "fraught with fraud and crime" cryptocurrency industry, and now he will shift his attention to the illicit use of artificial intelligence.

He also believes that artificial intelligence is the most innovative technology of our time, and therefore, it is foreseeable that there will be more financial crimes associated with it.

However, Gensler's remarks do not indicate that the SEC will relax its control over cryptocurrencies. As lawsuits against major crypto companies such as Ripple, Binance, and Coinbase are still ongoing, the SEC will continue to enforce its current actions against cryptocurrency companies.