- Two SEC lawyers have resigned following a federal judge’s rebuke of the agency’s abuse of power.
- Judge Robert J. Shelby accused the SEC of false and misleading arguments in a case against DEBT Box.
- The lawyers resigned as they were warned by an SEC official about a potential termination.
According to the latest Bloomberg report, two lawyers of the US Securities and Exchange Commission (SEC) resigned following a Utah judge’s rebuke of the regulator’s “gross abuse of power.” People familiar with the matter revealed that the lawyers, Michael Welsh and Joseph Watkins, declared their resignations while an SEC official warned them of a possible termination.
Previously, Federal Judge Robert J. Shelby challenged the SEC’s claims in a case against crypto firm DEBT Box. The judge asserted that several of the SEC’s claims, especially those about the platform’s asset transfers, were “false or misleading.” In a March 18 filing, the court pinpointed the agency’s abuse of power about which Coinbase’s Chief Legal Officer Paul Grewal posted. The statement read,
The Commission’s above-discussed conduct constitutes a gross abuse of the power entrusted to it by Congress and substantially undermined the integrity of these proceedings and the judicial process.
Judge Shelby stood firm on his claims that the SEC’s arguments against the crypto firm were mixed with false statements and misrepresentations and lacked evidence. For instance, in an argument, lawyer Welsh posited that Draper, Utah-based DEBT Box, was closing bank accounts and moving assets overseas. However, the judge concluded that it was a misleading statement. Later, Welsh apologized for the error, clarifying that miscommunication caused the mistake.
In December, SEC enforcement Chief Gurbir Grewal approached the court conveying apologies on behalf of the commission. He stated that new attorneys had been appointed for the case.
DEBT Box attorneys filed a motion against the SEC requesting the court to necessitate the regulators to pay more than $1.5 million in fees and other expenses in the case. Both SEC lawyers and DEBT Box lawyers haven’t responded to the matter.
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