The United States Securities and Exchange Commission (SEC) revealed it has obtained a temporary asset freeze, restraining order, and other emergency relief against Draper-based Digital Licensing, Inc., under the name “DEBT Box,” alleging the firm of executing a $50 million fraudulent cryptocurrency scheme.
SEC Targets Another Crypto Company
In the ongoing war against digital assets, the SEC seems to have pulled another stunt. This time, the regulatory watchdog has targeted DEBT Box, a decentralized, eco-friendly, blockchain technology project.
We obtained a temporary asset freeze, restraining order, and other emergency relief against DEBT Box and its four principals, Jason Anderson, his brother Jacob Anderson, Schad Brannon, and Roydon Nelson in connection with a fraudulent scheme to sell crypto asset securities.
— U.S. Securities and Exchange Commission (@SECGov) August 3, 2023
The SEC’s action also extends to the company’s four main executives, Jason Anderson, Jacob Anderson, Schad Brannon, and Roydon Nelson, as well as 13 additional defendants, alleging they are connected to a cryptocurrency scheme that defrauded hundreds of investors of nearly $50 million.
In the wake of the allegations, the SEC imposed a temporary asset freeze, restraining order, and other emergency measures against DEBT Box, charging the defendants in an ongoing scheme that began in March 2021 to sell unregistered securities they call “node licenses.”
What does the Complaint say?
According to the SEC’s complaint, which was unveiled yesterday in the U.S. District Court for the District of Utah, the defendants allegedly used hundreds of online videos, social media posts, and investor events to convince investors that these node licenses would generate various crypto asset tokens through crypto mining activities.
However, in reality, the node licenses were a sham intended to obscure the fact that the total supply of each token was created by DEBT Box instantaneously using code on a blockchain. Tracy Combs, director of the SEC’s Salt Lake Regional Office, said,
“We allege that DEBT Box and its principals lied to investors about virtually every material aspect of their unregistered offering of securities, including by falsely stating that they were engaged in crypto asset mining,”
Furthermore, the SEC’s complaint alleged that DEBT Box and its principals along with defendants James Franklin, Western Oil Exploration Company Inc., and Ryan Bowen, lied to investors about the revenues of the businesses purportedly driving the value of the tokens.
War on Digital Assets Continue
This comes on the heels after the SEC brought charges against Richard Heart, the founder of the crypto project Hex, along with three associated entities, on July 31, for allegedly conducting unregistered crypto assets securities offerings.
These developments add to the extensive list of lawsuits, the US SEC, has filed against various crypto projects and influencers, since the beginning of this year. The agency has brought more than 130 crypto lawsuits to date, forcing smaller companies to shut down and others, who can afford the steep cost of litigation, to settlements.
Despite the aggressive clampdown, several leading individuals from the finance industry as well as prominent lawmakers across the world, have strongly opposed the regulator’s vicious war on digital assets.
The crypto community has pushed to frame the incessant fights with the SEC as referendums on the broader industry, saying that Gensler’s agency is a rogue actor squashing the United States’s chances of becoming a digital assets hub.
SEC’s Crypto War is Politically Motivated
On August 3, popular crypto attorney John Deaton accused the SEC Chair Gary Gensler of putting his political aspirations ahead of the needs of regular investors. The lawyer suggested Gensler has always been concerned with advancing his political career by pandering to the “anti-crypto army,” adding, “Not only does he not care about retail investors, I believe he has genuine contempt for retail investors.”
@GaryGensler is a politician before he is anything else. All he cares about is serving the @ewarren’s of the world so that he can get a higher position in government. Not only does he not care about retail investors, I believe he has genuine contempt for retail investors. https://t.co/mRjV2QM8uE
— John E Deaton (@JohnEDeaton1) August 2, 2023
Recently, Brad Garlinghouse, the CEO of Ripple, the creators of XRP, blasted the SEC, citing the regulatory body has created a “mess” of the regulatory situation for the entire digital assets landscape.
Garlinghous condemned the deplorable situation created by the American regulator in the crypto industry alleging the SEC along with Gensler’s regulation of crypto have continued to wreak havoc that has taken a toll on investors, traders, businesses, and the overall new asset class.
