The U.S. Securities and Exchange Commission (SEC) will shut down one of its eleven regional offices following a federal judge’s order to pay approximately $1.8 million due to “bad faith conduct” in handling a case against DEBT Box.
Closure of Salt Lake Regional Office
In a June 4 notice, the SEC announced the closure of its Salt Lake Regional Office in 2024, attributing the decision to “significant attrition.” Operations will be moved to the Denver office.
Judge’s Ruling and Financial Penalties
The decision to close the office follows Judge Robert Shelby’s dismissal of the SEC’s civil lawsuit against Digital Licensing, the company operating as DEBT Box. Judge Shelby ordered the SEC to pay around $1 million in attorney fees and $750,000 in receiver fees.
The SEC had filed a lawsuit in July 2023, alleging DEBT Box engaged in a $50 million crypto scheme. However, Judge Shelby found that the SEC acted in “bad faith” when it sought a temporary restraining order to freeze DEBT Box’s assets. Consequently, the judge sanctioned the SEC, mandating it to cover all attorney fees and costs linked to the improperly granted ex parte relief.
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Impact on SEC Personnel
Reports indicate that two SEC lawyers from the Salt Lake office resigned over the handling of the DEBT Box case. It remains unclear if their departure significantly contributed to the office’s attrition.
Miguel Francis-Santiago, DEBT Box’s Chief Marketing Officer, commented, “The SEC has decided to shut down [the Salt Lake City] office in direct response to the ‘gross misuse of power’ based on the dismissal of the D.E.B.T. Box case that if revisited by the SEC, must be brought back before Judge Shelby to ensure there is no misconduct or abuse of power.”
The SEC continues to pursue enforcement actions against several crypto firms, including Coinbase, Binance, Kraken, and Ripple. Recently, lawyers for Terraform Labs and its co-founder Do Kwon announced an in-principle settlement with the SEC.
