The US District Court for the District of Utah has dismissed the SEC’s case against DEBT Box without prejudice and fined the watchdog over $1.8 million for misconduct. These penalties, covering attorney fees and costs, were imposed due to the SEC's misleading actions in obtaining emergency relief ex parte.

The court granted the SEC’s motion to dismiss the current case without prejudice, allowing the agency to potentially file a related case in the future before the same judge. DEBT Box and other defendants had sought a dismissal with prejudice to prevent further SEC enforcement actions, but they expressed satisfaction with the outcome, calling it a significant victory.

DEBT Box stated:

“This is a major win for us, as it means the SEC cannot proceed with the current case.”

The court opted against dismissing the case with prejudice due to its early stage, minimal trial expenses incurred by the defendants, and the public interest in the SEC’s enforcement activities.

In earlier proceedings starting in July 2023, the SEC accused DEBT Box of participating in a $50 million fraud scheme. The regulator initially obtained a temporary restraining order and asset freeze against the firm. Subsequent investigations revealed that the SEC had misled the court by inaccurately describing account closures and misidentifying transaction details.

In March, the court sanctioned the SEC for its misconduct and imposed fines. Initially, the court ruled that the SEC could not refile the case, a decision that the SEC’s successful motion to dismiss without prejudice has now reversed.