Crypto Industry Cheers as SEC Must Pay $1.8 Million for ‘Gross Abuse’ of Power

The Securities and Exchange Commission has been dealt another blow in its crusade against crypto after a judge ordered the regulator to pay $1.8 million following its failed lawsuit against DEBT Box.

Last year, the SEC alleged that crypto mining firm DEBT Box “lied to investors” in a “fraudulent scheme” where it raised $50 million in Bitcoin and Ethereum. 

Yesterday, Utah District Court Judge Robert Shelby ruled that the case was a dud and that the regulator would have to cough up cash to cover legal costs. The judgment came after the judge said in March that the SEC’s conduct was “a gross abuse of the power  entrusted to it by Congress.”

DEBT Box declared it a “monumental victory,” its chief marketing officer Miguel Francis-Santiago telling Decrypt that it wasn’t just a victory for his company but “a win for the Web3 industry as a whole.”

“The time of America becoming a digital desert must end,” he continued. “We have fallen behind on the world stage, and if we don’t turn this around, America will be left behind.”

Laura Sanders, policy counsel for the non-profit Blockchain Association, told Decrypt that it was its “hope that this legal penalty has the intended effect of discouraging the SEC from utilizing unfair and deceptive tactics against any subject of an enforcement action.”

DeFi Education Fund’s chief legal officer Amanda Tuminelli told Decrypt that Judge Shelby could have gone further by dismissing the case with prejudice. Still, she said the court would likely with DEBT Box if the case was retried.

“The judge did impose an important condition on the SEC in his dismissal order: if the SEC chooses to bring this case against the same defendants again, they must do so before Judge Shelby,” Tuminelli explained. “And we know that Judge Shelby will not forget what happened the first time around.”

The SEC—under long-time Chair Gary Gensler—has relentlessly cracked down on the crypto industry, hitting numerous companies with lawsuits for allegedly selling unregistered securities over recent years.

But it has also been criticized for being too heavy-handed by the industry and lawmakers alike. 

Last week, in a surprise vote, both Democrats and Republicans voted to demand a clearer regulatory framework for the crypto sphere—something the industry has been seeking from the SEC for years.

Today, Minnesota Rep. Tom Emmer had a snarky response to the outcome of the DEBT Box case.

“Gary Gensler making great use of Americans’ taxpayer dollars,” he wrote.

Edited by Ryan Ozawa.