On Tuesday, May 28, the US District Court of Utah dismissed the SEC vs. Debt Box case, imposing over $1.8 million in fines on the securities regulator for misconduct.

The court imposed attorney fees and costs as fines on the SEC due to inaccuracies presented to secure its own relief. Additionally, the court approved the SEC’s request to dismiss the case without prejudice. Debt Box and other defendants had sought a dismissal with prejudice, which would have prevented the SEC from pursuing further enforcement action. Despite this, Debt Box viewed the ruling positively, stating:

“This is a significant win for us. It means that the SEC cannot proceed with the case as it stands.”

The District Court denied dismissal with prejudice because the process is still in its early stages, the defendants have not incurred significant trial expenses, and the SEC’s enforcement activities serve the public interest.

**The SEC vs. Debt Box Case**

Earlier in March 2024, the US District Court sanctioned the SEC for its actions against crypto startup Debt Box, which faced accusations of a $50 million fraud scheme in 2023. The SEC had obtained a temporary restraining order and asset freeze against Debt Box.

Subsequent proceedings revealed the SEC had provided inaccurate information to the court, including misrepresenting the timing of account closures and confusing domestic and international transactions.

In March, the court imposed sanctions on the SEC for misconduct and ordered it to pay an additional fine. Initially, the court decided the SEC could not refile its case. However, the SEC’s request for dismissal without prejudice has overturned this decision.

Many crypto firms engaged in legal battles with the SEC have welcomed this development, seeing it as a hopeful sign for contesting the SEC’s accusations.