In a significant development, a federal judge has ruled that the U.S. Securities and Exchange Commission (SEC) must pay a hefty sum of $1.8 million in the case against Digital Licensing, also known as Debt Box. The penalty was imposed as a result of the SEC’s dishonest behavior in obtaining and defending a temporary restraining order (TRO) through misleading information. Additionally, the judge has granted the SEC’s request to dismiss the case without prejudice.
The ruling was made by Chief District Judge Robert J. Shelby of the United States District Court for the District of Utah on Tuesday. He issued two orders in the case, one of which requires the SEC to pay $1,821,824 in attorney fees and costs. This sanction was imposed due to the SEC’s bad faith conduct in obtaining and defending the TRO and receivership, both of which were based on misrepresentations made to the court. The court document states that on March 18:
“The court found the Commission engaged in bad faith conduct in obtaining and defending the TRO and imposed a sanction against the Commission of all attorney fees and costs arising from the improvidently entered ex parte relief.”
The specific amounts that the SEC is ordered to pay are as follows: $8,239 to Calmes & Co. Inc. and Calmfritz Holdings LLC, $19,015 to Matthew D. Fritzsche, $252,316 to iX Global Defendants, $153,365 to the FAIR Project Defendants, $34,260 to the Debt Box Defendants’ local counsel, $565,498 to the Debt Box Defendants’ lead counsel, $42,191 to Brendan J. Stangis, and $746,942 to the Receiver.
In another order, Judge Shelby granted the SEC’s motion to dismiss the case against Debt Box and associated individuals and entities without prejudice. This means that the SEC’s new team of attorneys can reassess the case, conduct further investigations, and decide whether to proceed with a new complaint. However, the court has imposed a condition that any future related cases must be filed in the same court before the same judge to ensure continued oversight and address concerns about potential legal prejudice.
Following the court decisions, Debt Box took to the social media platform X to announce the dismissal of the SEC’s case against them. They expressed their satisfaction, stating that the case is now closed and any future action by the SEC would have to go through Judge Shelby. Debt Box sees this as a monumental victory not just for themselves but for the entire industry and their dedicated community, emphasizing the importance of integrity and fairness in regulatory practices.
The judge’s ruling, which includes the SEC being ordered to pay $1.8 million and the dismissal of the case, has sparked interest and discussion. Readers are encouraged to share their thoughts on this matter in the comments section below.
