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Republican senators slam SEC over ‘deeply troubling’ conduct in crypto case

Sen. J.D. Vance (R-Ohio)
Greg Nash
Sen. J.D. Vance (R-Ohio) speaks to reporters outside the Senate Chamber during a vote on Tuesday, September 19, 2023.

Several Republican senators slammed the Securities and Exchange Commission (SEC) on Wednesday over its “deeply troubling” conduct in a recent case against the cryptocurrency company DEBT Box.

The SEC brought the case against DEBT Box in July, accusing the company of “an ongoing, sprawling, fraudulent securities offering” that defrauded investors of at least $49 million.

The federal judge overseeing the case granted the agency’s request for a temporary restraining order that froze DEBT Box’s assets after the SEC suggested individuals associated with the company were “currently in the process of attempting to relocate assets and investor funds overseas.”

However, the judge reversed his decision in late November, voicing concerns that the SEC “made materially false and misleading representations” that “undermined the integrity of the proceedings.”

The SEC acknowledged in December that one of its attorneys made a statement at a July hearing that “unbeknownst to him at the time, was inaccurate” and that its attorneys “failed to correct that statement when they learned of the inaccuracy.” The agency filed a motion to dismiss the case last week.

In a letter to SEC Chair Gary Gensler on Wednesday, Sens. JD Vance (R-Ohio), Thom Tillis (R-N.C.), Bill Hagerty (R-Tenn.), Cynthia Lummis (R-Wyo.) and Katie Britt (R-Ala.) expressed concerns about the agency’s conduct.

“It is unconscionable that any federal agency—especially one regularly involved in highly consequential legal procedures and one that, under your leadership, has often pursued its regulatory mission through enforcement actions rather than rulemakings—could operate in such an unethical and unprofessional manner,” the senators wrote.

“That the Commission counsel could be so unfamiliar with the relevant facts of the case, and that Commission attorneys could have such little regard for the veracity of evidence presented to the Court, is deeply troubling,” they added.

The senators also questioned whether other enforcement cases brought by the SEC should be scrutinized given its recent actions.

“It is difficult to maintain confidence that other cases are not predicated upon dubious evidence, obfuscations, or outright misrepresentations,” they wrote.

“The public must have well-placed confidence in the Commission’s enforcement actions, its motives for undertaking them, and its professionalism when carrying them out,” the senators later added. “This trust is undermined, and your mission compromised, by episodes like the DEBT Box case.”

The Hill has reached out to the SEC for comment.

Tags Bill Hagerty cryptocurrency Cynthia Lummis DEBT Box Gary Gensler J.D. Vance Katie Britt SEC Securities and Exchange Commission Thom Tillis

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