Judge orders SEC to pay crypto firm Debt Box’s legal fees

A U.S. federal judge has ordered the Securities and Exchange Commission (SEC) to pay approximately $1.8 million in legal fees to crypto firm Digital Licensing Inc., also known as Debt Box, after dismissing the SEC’s case against the company without prejudice. This means that the case could potentially be reopened in the future.

Judge Robert Shelby of the Utah District Court ruled in a filing on Tuesday that the SEC must cover the attorney fees and relevant legal costs incurred by Debt Box. The judge also stated that the final amount of fees requested by the defendants and the receiver is reasonable.

In a separate filing on the same day, Judge Shelby dismissed the case without prejudice at the SEC’s request. The Commission argued that this type of dismissal would protect investors and serve the public interest, while not causing legal prejudice to the defendants. Debt Box celebrated the court’s decision in an X post following the order:

The court has imposed sanctions on the SEC, requiring them to cover the attorney fees and costs that D.E.B.T. Box incurred during this legal battle. This is a significant step towards justice and transparency. […] This means the case is closed, and any future action by the SEC would have to go through Judge Shelby.

The case began in July 2023 when the SEC filed a complaint accusing Debt Box of defrauding investors of at least $49 million. However, in a March filing, the federal judge criticized the SEC’s conduct in obtaining the temporary restraining order, which included an asset freeze and the appointment of a receiver to take control of the company.

In April, two SEC lawyers leading the case against Debt Box reportedly resigned after the Utah judge stated that the case was “marred by false statements and misrepresentations.” The SEC admitted in December that it had made inaccurate statements and had fallen short of the expectations to be accurate and candid in court.

The SEC’s strongly anti-crypto stance is nothing new. The regulator only approved the first US-listed spot Bitcoin ETFs in January after many years of legal battles with the industry and back-and-forth ETF registrations and refusals. Earlier this month, the SEC also expressed strong disapproval for a recently approved bill widely seen as pro-crypto.

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