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Republican Senators Criticize SEC’s Handling of Debt Box Lawsuit

A cohort of five Republican lawmakers from the United States Senate have lambasted the Securities and Exchange Commission (SEC) for its handling of a lawsuit against Digital Licensing, trading as Debt Box.

In a missive dated February 7 addressed to SEC Chair Gary Gensler, six Republican senators articulated their “significant concerns” regarding the commission’s conduct in the Debt Box affair, contending that the regulator behaved in an “unethical and unprofessional manner.”

The SEC, in filings with the U.S. District Court for the District of Utah, Northern Division, acknowledged in December that it had failed to be “accurate and candid” in asserting that Debt Box shuttered bank accounts and intended to relocate to the United Arab Emirates.

“Whether Commission staff deliberately misrepresented evidence or unwittingly presented false information, this case raises questions about the integrity of other enforcement actions initiated by the Commission,” asserted the senators.

“It is challenging to sustain confidence that other cases are not based on questionable evidence, obfuscations, or outright misrepresentations.”

The six senators—JD Vance, Thom Tillis, Bill Hagerty, Cynthia Lummis, and Katie Boyd Britt—seemingly refrained from prescribing a specific course of action for the SEC going forward, merely voicing their apprehensions.

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They remarked that the SEC’s proposed remedy of mandatory staff training and personnel reshuffling may prove inadequate.

The SEC instigated legal proceedings against Debt Box in July 2023, alleging the company orchestrated an illicit $50 million cryptocurrency scheme.

The court, on the basis of the SEC’s assertions, sanctioned a temporary restraining order to immobilize Debt Box’s assets.

However, subsequent revelations disclosed numerous inaccuracies in the SEC’s claims, prompting the court to threaten sanctions and the commission to seek dismissal of the case.

It remains unclear whether the Republican senators aimed to cast doubt on other enforcement actions targeting cryptocurrency firms by the SEC.

The commission currently has active lawsuits against Binance, Kraken, Ripple, and Coinbase. Cointelegraph reached out to the SEC for comment but received no response at the time of going to press.

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