The SEC accused the cryptocurrency company of “an ongoing, sprawling, fraudulent securities offering” that defrauded investors of at least $49 million in July.
The agency suggested individuals associated with DEBT Box were “currently in the process of attempting to relocate assets and investor funds overseas” and requested a temporary restraining order.
The federal judge on the case granted the request, freezing DEBT Box’s assets.
But, in late November, the judge reversed the decision and raised concerns that the SEC had “made materially false and misleading representations” that “undermined the integrity of the proceedings.”
In December, the SEC acknowledged 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 SEC filed a motion to dismiss the case last week.
In a letter to SEC Chair Gary Gensler on Wednesday, several Senate Republicans decried the agency’s conduct.
“It is unconscionable that any federal agency … could operate in such an unethical and unprofessional manner,” Sens. JD Vance (R-Ohio), Thom Tillis (R-N.C.), Bill Hagerty (R-Tenn.), Cynthia Lummis (R-Wyo.) and Katie Britt (R-Ala.) 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 said the SEC’s recent actions raised questions regarding its other enforcement cases.
“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 added. “This trust is undermined, and your mission compromised, by episodes like the DEBT Box case.”
The Hill’s Julia Shapero has more here.