SEC Lawyers Resign Amid Criticisms in Crypto Case Against DEBT Box
Two lawyers from the Securities and Exchange Commission (SEC), Michael Welsh and Joseph Watkins, resigned on April 22 following a federal judge’s sanction and severe criticism of the regulatory agency’s handling of a crypto-related case.
Initially, the SEC legal unit, led by attorney Michael Welsh, had convinced the court to freeze DEBT Box’s assets, arguing the company was moving to Dubai, beyond U.S. regulatory reach.
Two Securities and Exchange Commission lawyers resigned after a federal judge sanctioned and sharply rebuked the Wall Street regulator for “gross abuse” of power in a crypto case. https://t.co/4rI81TNFky
— Bloomberg Crypto (@crypto) April 22, 2024
According to sources familiar with the matter , Welsh and Watkins stepped down after an SEC official informed them that they would face termination if they stayed. The attorneys were leading the SEC’s case against Digital Licensing Inc., a crypto platform known as DEBT Box.
The lawsuit against DEBT Box was marred by allegations of false statements, misrepresentations, and a lack of evidence, as stated by Robert Shelby, the federal district court judge in Salt Lake City overseeing the case. In March, Shelby sanctioned the SEC for what he deemed “gross abuse” of power, prompting an apology from the SEC’s head of enforcement for the agency’s missteps.
The SEC had accused DEBT Box and its executives of defrauding investors of at least $50 million in July 2023, leading to the freezing of the company’s assets and the appointment of a receiver. The asset freeze was overturned after Shelby discovered potential false and misleading representations made by the SEC, however. Due to the judge’s ruling, the SEC was ordered to cover some of DEBT Box’s attorney’s fees.
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