The United States Securities and Exchange Commission (SEC) has taken another step in its efforts to dismiss the case against cryptocurrency mining software firm Digital Licensing, also known as Debt Box. The agency has filed a reply to its motion to dismiss the case without prejudice, which would allow them to sue Debt Box again in the future.
The U.S. District Court for Utah Northern Division had previously reprimanded and dismissed the SEC’s initial attempt to dismiss the case without prejudice, citing “gross abuse of power.” Additionally, the court ordered that Debt Box should be reimbursed for its legal fees. Debt Box had requested that the case not be dismissed without prejudice, arguing that it was a tactic by the SEC to avoid a permanent dismissal.
In its reply, the SEC argued that allowing the case to be dismissed without prejudice would be in the best interest of Debt Box investors, and that previous precedents supported granting a plaintiff’s request for dismissal without prejudice. The SEC’s lead attorneys in the case resigned following the court’s sanctions.
If the case were dismissed without prejudice, Debt Box proposed 11 conditions that the SEC would need to meet if it chose to refile the case. The SEC agreed, either fully or partially, to most of these conditions. However, it opposed providing Debt Box with all the material it had subpoenaed in the case, as well as having a representative present during non-subpoenaed interviews in the investigation. The SEC also opposed the condition of producing potentially exculpatory information from its investigation.
Debt Box is accused of defrauding investors of $50 million and selling unregistered securities in the form of software licenses for mining digital assets. The SEC had temporarily frozen the company’s assets in August, but the court sanctioned the agency for using a “false narrative” about the company’s plans to relocate outside the U.S. as a justification for the freeze. The SEC expressed regret over this action.
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