SEC Secures Restraining Order Against Suspected Crypto Scam Firm

In its quest to enforce securities regulations, the Securities and Exchange Commission (SEC) has obtained a temporary restraining order against a Utah firm doing business as “DEBT Box”.

The agency obtained the order after alleging that the firm has defrauded investors of at least $49 million in a crypto scheme. The SEC in a statement on Thursday said brothers, Jason and Jacob Anderson, and 15 others, raised millions in bitcoin and ether through their company from hundreds of U.S. investors since March 2021.

According to the SEC, they sold unregistered securities known as “node licenses,” which they promised investors would generate “crypto asset tokens through crypto mining activity and that revenue-generating businesses in a variety of sectors would drive the value of the various tokens DEBT Box mined.”

Contrary to the promise, the firm allegedly used investors’ funds to buy luxury cars, homes and “lavish” vacations.

“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,” said Tracy S. Combs, director of the SEC’s Salt Lake Regional Office. “We filed this emergency action to protect the victims of the defendants’ unlawful actions and stop further harm.”

SEC’s alleges sale of unregistered securities

The SEC has repeatedly referred to cryptocurrencies as securities. Although it doesn’t seem to have a clear definition of which digital assets are securities and which aren’t, the SEC seems to imply that only Bitcoin is not a security.

Coinbase recently made a shocking revelation that the SEC demanded it delist every digital asset except Bitcoin, as every other asset is a security. For DEBT Box, the agency listed BLGD, GROW, NATG, XPLR, DLG, ALUM, BEV, BLOX, DRIP, DCM and DEBT as unregistered securities that the firm sold to investors.

Similarly, the SEC recently cracked down on crypto exchanges in the U.S., accusing them of selling and trading unregistered securities. Because of this, Coinbase and Binance are currently in court, defending themselves against SEC allegations.

The need for proper regulation

The SEC has adopted an enforcement approach to regulation in the crypto industry despite a lack of clear regulation to guide the industry. This hasn’t been well received by the industry, and a call for clear regulation has been made many times.

Coinbase for example has filed a suit in court demanding that the SEC come up with clear regulations. The SEC has in response said there’s enough guidelines for crypto that should be followed.

Fortunately, U.S. lawmakers are already working on drafting a comprehensive regulatory framework for the industry, and hopefully there will be clear guidance soon.

Leave a Reply

Your email address will not be published. Required fields are marked *