SEC Lawyers Resign After Judge Sanctions the Regulator for 'Gross Abuse of Power'
Two lead attorneys for the U.S. Securities and Exchange Commission (SEC) in the case against crypto firm Debt Box have reportedly resigned. This followed a federal judge sanctioning the SEC for its âgross abuse of powerâ after the agency made âmaterially false and misleading representationsâ in its lawsuit against the cryptocurrency firm.
Lead Attorneys in Debt Box Case Resign
The U.S. Securities and Exchange Commission (SEC) faced major repercussions after a federal judge concluded that the agency had misused its authority in a case against a crypto firm. Two SEC lawyers, Michael Welsh and Joseph Watkins, reportedly resigned this month following severe criticism from the judge regarding the agencyâs tactics.
The two lawyers served as lead attorneys in the SECâs case against Digital Licensing Inc., a cryptocurrency platform also known as Debt Box. Sources familiar with the situation revealed to Bloomberg Monday that an SEC official informed the lawyers that they would be terminated if they did not resign.
The SEC accused Debt Box of defrauding investors and requested the court to freeze the companyâs assets and put it under receivership. However, Judge Robert Shelby later discovered that the SECâs case relied on false statements and lacked substantial evidence. Criticizing the arguments presented by Welsh and the evidence provided by Watkins, the judge concluded that the SEC had made âmaterially false and misleading representationsâ in its lawsuit against the cryptocurrency firm.
Judge Shelby sanctioned the SEC for its âgross abuse of power.â The SECâs enforcement chief and Welsh subsequently apologized to the court. The securities regulator stated that it âdeeply regretsâ the errors made in the case against Debt Box and promised to âconduct mandatory trainingâ for staff involved to avoid similar errors in the future. The SEC has attempted to dismiss the case against the crypto firm without prejudice, but a final decision from the judge is pending.
In February, five U.S. senators expressed their concerns to SEC Chairman Gary Gensler regarding the agencyâs enforcement action against Debt Box. The lawmakers stressed: âWe are greatly concerned by the Commissionâs conduct in this case.â
What do you think about the two lawyers resigning after the judge sanctioned the SEC based on the arguments and evidence they presented against crypto firm Debt Box? Let us know in the comments section below. #Write2Earn