“It is unconscionable that any federal agency…could operate in such an unethical and unprofessional manner.”
WASHINGTON, D.C. – Senator JD Vance (R-OH), along with Senators Thom Tillis (R-NC), Bill Hagerty (R-TN), Cynthia Lummis (R-WY), and Katie Britt (R-AL), sent a letter to Securities and Exchange Commission (SEC) Chairman Gary Gensler to raise concerns over an enforcement case in which the SEC used false statements as the basis to freeze assets and bank accounts of a cryptocurrency platform.
The agency initially won court approval to freeze the assets of the platform through an expedited process known as an ex parte motion for a temporary restraining order where the defense is neither present nor given the opportunity to rebut the prosecution. However, the decision was later reversed after the court determined the agency made false statements to justify its enforcement action.
Congress has long entrusted the SEC, since its creation in 1934, with regulating the US capital markets and enforcing our federal securities laws. In doing so, the SEC has sought to protect investors and maintain fair, orderly, and efficient markets through its powers to both set common sense regulations and enforce the rules of the road.
The SEC’s history as a strong and effective regulator has promoted public confidence in our markets and helped to establish the American capital markets as the deepest and most liquid in the world. Unfortunately, the SEC’s recent behavior directly threatens public confidence in our markets and the SEC’s own enforcement actions. As the Senators write: “The public must have wellplaced confidence in the Commission’s enforcement actions, its motives for undertaking them, and its professionalism when carrying them out. This trust is undermined, and your mission compromised, by episodes like the DEBT Box case.”
The Senators’ letter reads, in part:
“We write to express our concerns regarding developments in the Securities and Exchange Commission’s (“the Commission”) enforcement proceedings against Digital Licensing Inc., also known as “DEBT Box,” the company’s principals, and 13 other defendants.
“As part of these proceedings, the Commission sought a temporary asset freeze, restraining order, and other emergency relief against DEBT Box, all of which were granted by the U.S. District Court for the District of Utah. However, the Court became aware that “the Commission made materially false and misleading representations…and undermined the integrity of the proceedings.” In the meantime, the restraining order froze the defendants’ personal and business assets, shut down DEBT Box, and caused its native token to crash by more than 56 percent. The Commission’s Enforcement Division Director, Grubir Grewal, admitted to these misrepresentations in its request that the court refrain from levying sanctions. We are greatly concerned by the Commission’s conduct in this case. It is unconscionable that any federal agency—especially one regularly involved in highly consequential legal procedures and one that, under your leadership, has often pursued its regulatory mission through enforcement actions rather than rulemakings—could operate in such an unethical and unprofessional manner…
“As you know, the Commission’s mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation is of the utmost importance. The public must have wellplaced confidence in the Commission’s enforcement actions, its motives for undertaking them, and its professionalism when carrying them out. This trust is undermined, and your mission compromised, by episodes like the DEBT Box case.”
Read the full letter here and below.
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