By Leo Schwartz and Jeff John Roberts. (Fortune). December 1, 2023.
A federal judge has rebuked the Securities and Exchange Commission over its treatment of a crypto firm, expressing concern the agency had made “materially false and misleading representations” in order to freeze millions of dollars in assets belonging to the project.
The case, filed in Utah federal court, concerns a firm called Digital Licensing Inc., or DEBT Box. In its complaint, filed this summer, the SEC alleged the project had defrauded investors out of nearly $50 million by selling unregistered securities called “node licenses.”
As part of the initial process, the SEC successfully obtained a temporary restraining order and asset seizure through a so-called ex parte application—meaning the crypto firm was not informed of the proceedings and was not able to challenge them in court at the time.
These types of one-sided proceedings are uncommon and typically take place when a government agency fears that notifying the defendant will result in their destroying evidence or whisking assets overseas. Meanwhile, a temporary restraining order requires a party to show a high likelihood of “irreparable harm”—a high bar to clear.
Read the full article here: Fortune