A federal judge has ordered the Securities and Exchange Commission (SEC) to show cause why it should not face sanctions after finding the agency made misleading statements about DEBT Box to obtain an emergency court order freezing over $49 million in assets last July.

The rebuke from Chief Judge Robert Shelby spotlights “materially false” representations, which he says undermine case integrity. In August, the SEC covertly requested Shelby freeze the assets of DEBT Box, accused of defrauding thousands through a crypto investment scheme.

The move came after SEC attorney Michael Welsh signed a sworn statement alleging the companies were actively shifting money overseas to evade regulators. Welsh also told the judge that the defendants had blocked access to social media and closed 33 bank accounts.

Key Details:

• SEC sought Shelby’s backing through an ex parte filing, meaning without notifying defendants.
• Asserted required emergency action given attempts to transfer assets and investor funds abroad.
• Shelby later found the SEC’s urgent claims were misleading or outright false.
• No proof was found that asset transfers overseas were happening when the SEC applied for an asset freeze.
• Statements also imply the commission’s investigation was covert, which has not been established.

Shelby pointed out over a half-dozen questionable statements made by the SEC to get the asset freeze. He studied how the SEC made its case for the freeze. In October, Shelby ended the freeze after the...

Read Full Story: https://news.google.com/rss/articles/CBMiWmh0dHBzOi8vbWlsa3JvYWQuY29tL25ld3Mv...