The United States Securities and Exchange Commission (SEC) suffered another stinging defeat in its campaign against the crypto industry yesterday, a development described by the pro-XRP legal community as a profound setback. On Tuesday, January 30, the SEC announced its intention to dismiss its high-profile case against the crypto firm DEBT Box.
The case, which originally accused DEBT Box of defrauding investors out of nearly $50 million by selling unregistered securities, took an unexpected turn when the SEC sought to withdraw their lawsuit. This decision follows a series of events where the SEC faced potential sanctions from Judge Robert Shelby of the Northern Division District Court of Utah for reportedly misleading the court.
XRP Legal Community Reacts
John E. Deaton, a prominent attorney in the pro-XRP community, voiced his criticism of the SEC’s handling of the case. He stated, “Gary Gensler, this disgrace falls under your leadership, or the lack thereof.” Deaton pointed to a pattern of questionable legal strategies by the SEC, including the Ripple case and the Grayscale Bitcoin ETF denial.
He emphasized that the findings in these cases should have prompted a reassessment of the SEC’s approach, yet the agency continued to act with “a complete disregard for the truth, and for justice.” He added:
Despite those incredible findings – findings that would make any lawyer or leader cringe from embarrassment and humiliation – your agency’s lawyers continued to act with a complete disregard for the truth, and for justice. Now, you run away, attempting to shield your unethical lawyers from facing the very law they swore to uphold.
Another legal expert from the XRP community, Bill Morgan, highlighted the severity of the situation, saying, “What an extraordinary embarrassment that due to the misconduct of its attorneys the SEC would go to this length to seek to avoid sanctions.” Morgan’s statement underscores the unusual position the SEC finds itself in, retreating from a case to possibly avoid further legal complications.
Popular XRP community lawyer Jeremy Hogan also offered a harsh critique of the SEC’s decision to back down. He said, ““Waaaiiit. The SEC thinks that a multi-Million dollar fraud was perpetrated against Americans, but let’s it go in order to save itself embarrassment and/or money? Kinda like getting your girl pregnant, then forcing her to have an abortion to not have child support obligations…”
Judge Gets The SEC Into Trouble
The SEC’s filing revealed an admission of certain missteps in the case. While not conceding to all of the defendants’ claims, the SEC lawyers acknowledged that their presentation of evidence was flawed and that they lacked concrete proof of overseas asset transfers, a key point in their initial allegations.
In response to these developments, the DEBT Box defendants have aggressively contested the SEC’s actions, arguing for a dismissal with prejudice and demanding compensation for the legal costs incurred due to the SEC’s actions. The defendants contend that the SEC’s conduct caused “enormous damage,” both financially and reputationally.
As the SEC attempts to navigate this dismissal without prejudice, allowing for the possibility of reopening the case in the future, the legal crypto community is closely monitoring the outcome. This case shows once again the SEC’s regulatory overreach and lack of ethical behavior.
At press time, XRP traded at $0.51224.
Featured image created with DALL·E, chart from TradingView.com