Utah judge blasts ‘gross abuse of power’ by federal prosecutors in Draper crypto fraud case

A federal judge sanctioned SEC attorneys on Monday, March 18, 2024, for presenting misleading evidence in a case against Utah cryptocurrency company DEBT Box.

Several times in his 80-page ruling and analysis, Shelby called the SEC’s conduct “troubling” and said attorneys acted in “bad faith” to get their way. The federal agency now will have to pay DEBT Box and codefendants’ attorneys’ feels and any other legal costs associated with the temporary restraining order and asset freeze.An SEC spokesperson said the agency is reviewing Shelby’s decision.

“And rather than use the investor funds generated from the sale of the node software licenses to support those underlying businesses,” the complaint said, “Defendants misappropriated the funds for their own personal gain — buying luxury vehicles and homes, taking lavish vacations, and showering themselves and their friends with cash.”The SEC asked Shelby in July to grant a temporary restraining order against DEBT Box and its associates, and to freeze the company’s assets.

Then, in a “final attempt” to convince Shelby to grant a restraining order, SEC attorney Michael Welsh told the judge that he was “reminded by investigative staff ... that even in the last 48 hours Defendants have closed additional bank accounts, and I believe the number, I don’t have it in front of me, was around 33 bank accounts.”

“Not only were no accounts closed in the 48 hours before the hearing, no accounts were closed in all of July 2023,” Shelby wrote in his sanction oder. Instead, the court concluded, the statement was made in response to a viewer question about the “‘SEC squeeze on crypto’ and its potential implications for DEBT Box.” Anderson had said Abu Dhabi provided a “clearer regulatory framework” for cryptocurrency brokers. DEBT Box had, indeed, moved its operations overseas, but the video was not evidence of evasion, Shelby ruled, nor did it prove defendants were “in the process of moving assets or funds overseas.

Source: News Formal (newsformal.com)

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