SEC continues to take legal actions against crypto-related firms.
The United States principal enforcer of federal securities laws, the Securities and Exchange Commission (SEC), has imposed a temporary freeze on the assets of Digital Licensing Inc., also known as "DEBT Box."
The freeze comes in response to allegations that the company executed a fraudulent crypto operation amounting to an estimated $50 million.
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Upon initiating this unprecedented move on August 3rd, the SEC not only applied a temporary asset freeze but also issued a restraining order and other emergency provisions targeting a Utah-based cryptocurrency company.
The regulatory enforcement action was directed to the firm's four primary officers, Jason Anderson, his brother Jacob Anderson, Schad Brannon, and Roydon Nelsonand, as well as additional 13 defendants.
According to the SEC, since March 2021, the firm has been selling what it referred to as "node licenses," essentially unregistered securities. The company, promoting itself as an eco-friendly decentralized blockchain where "crypto meets commodities," had promoted the sale of "software mining licenses," which required activation to commence the mining process.
The SEC's allegations extend to claims that DEBT Box and its leading figures falsely stated to investors that the "nodes" would yield crypto tokens through mining, and business revenues would elevate these token values. To quote the SEC's official statement, it termed the node licenses as a "sham."
Tracy Combs, who leads the SEC's Salt Lake Regional Office, voiced a scathing criticism against the company, accusing DEBT Box and its principals of deceiving investors on almost every crucial aspect of their unregistered offering of securities.
We allege that DEBT Box and its principals lied to investors about virtually every material aspect of their unregistered offering of securities, including by falsely stating that they were engaged in crypto asset mining.
Now, the regulatory body is in pursuit of permanent injunctions, return of illicit gains, and civil penalties against the firm.
This instance is a stark reminder of the potential risks associated with investing in unregulated securities within the rapidly evolving crypto industry. As regulatory oversight intensifies, it remains crucial for investors to exercise due diligence and stay informed about the legitimacy of their investments.
The wave of SEC's lawsuits against crypto firms started in June when it sued major crypto exchanges Coinbase and Binance, accusing the firms of offering unregistered securities.
