TL;DR
- The United States Securities and Exchange Commission dropped the case against DEBT Box to avoid sanctions, highlighting problems in its handling and drawing pro-XRP criticism against Gary Gensler.
- The community criticizes Gensler for questionable tactics in previous cases, such as Ripple and Grayscale, while the Commission faces legal problems and lack of evidence.
- The withdrawal highlights errors in testing and evidence, underscoring the complexity of regulating the crypto market.
The United States Securities and Exchange Commission (SEC) suffered another resounding defeat in its crackdown on the crypto industry, which the pro-XRP legal community described as a significant setback.
On January 30, the SEC announced its intention to withdraw its high-profile case against crypto firm DEBT Box.
This case, which originally accused DEBT Box of defrauding investors of nearly $50 million by selling unregistered securities, took an unexpected turn when the U.S. Securities and Exchange Commission sought to drop its lawsuit.
This decision comes after a series of events in which the Commission faced possible sanctions from Judge Robert Shelby of the Utah Northern Division District Court for allegedly misleading the court.
The reaction from the pro-XRP legal community was immediate.
John E. Deaton, a prominent lawyer in that community, expressed his criticism of the management of the case.
Addressing Gary Gensler, chairman of the SEC, Deaton noted that this “disrepute falls under his leadership, or lack thereof.”
@GaryGensler this disgrace falls under your leadership, or the lack thereof. First, your lawyers were described by a federal judge as hypocrites lacking faithful allegiance to the law in the @Ripple case. Later, an Appellate Court ruled your denial of a spot #BTC ETF was… https://t.co/PExezQwmXE
— John E Deaton (@JohnEDeaton1) January 30, 2024
He referenced earlier criticism from a federal judge in the Ripple case, where lawyers were described as hypocrites who lack faithful allegiance to the law.
He also cited an appeals court ruling that called Gensler’s denial of a Grayscale Bitcoin ETF arbitrary and unjustified.
Deaton stressed that, despite such unfavorable findings, the Commission lawyers continued to act “with a complete disregard for truth and justice.”
Criticism intensified as he accused the U.S. Securities and Exchange Commission of trying to flee, seeking to protect his unethical lawyers from facing the very law they swore to uphold.
SEC filing revealed an admission of certain errors in the case
Although it has not conceded to all of the defendants claims, the Commission acknowledged flaws in their evidentiary presentation and the lack of concrete evidence of foreign asset transfers, a crucial point in their initial accusations.
In response, the DEBT Box defendants have aggressively challenged actions, demanding a withdrawal with prejudice and seeking compensation for legal costs incurred due to the conduct of the United States Securities and Exchange Commission.
This case once again highlights the Commission regulatory meddling and perceived lack of ethical behavior in the crypto industry.
As the SEC attempts to navigate this withdrawal without prejudice, the crypto legal community is closely monitoring the outcome, underscoring the problematic regulatory and ethical situation that persists in this ever-evolving market.
