SEC ‘Regrets’ Misleading Statements in DEBT Box Case, Coinbase CLO Skeptical

• Judge scrutinizes the SEC for false claims in the DEBT Box case
• SEC “regrets” and plans mandatory staff training following misleading statements in the DEBT Box case
• Coinbase’s CLO expressed skepticism about the SEC’s “regret.”

The U.S. Securities and Exchange Commission (SEC) has recently acknowledged mistakes in its legal proceedings against cryptocurrency firm DEBT Box. This admission comes amid scrutiny from a federal judge in Utah over potentially misleading statements by the SEC. 

Speaking on X, Ripple CTO David Schwartz revealed the SEC’s plan for corrective action, stating, “The SEC has filed its response to the Order to Show Cause in the Debt Box case.” 

Judge Robert J. Shelby has intensified this scrutiny, challenging the SEC’s practices in a decisive move. He identified several claims by the SEC, especially those about DEBT Box’s supposed asset transfers to circumvent U.S. laws, as “false or misleading.” Shelby’s findings led to the dissolution of a temporary restraining order (TRO) previously imposed on DEBT Box in October, marking a significant turn in the case.

Paul Grewal, Chief Legal Officer at Coinbase, expressed skepticism about the SEC’s expressed regret on X. He commented; 

While claiming to ‘regret’ its ‘errors,’ the same agency’s Chair is again browbeating an entire American industry. There is no humility, reflection, or restraint.

Moreover, the SEC now faces the prospect of sanctions, a scenario that underscores the gravity of Judge Shelby’s findings. The SEC is required to explain why its attorneys should not face sanctions, especially considering the impact of their actions on DEBT Box.