A group of Republican senators, led by J.D. Vance, has expressed concerns about a lawsuit filed against cryptocurrency company DEBT Box. The Securities and Exchange Commission (SEC) had been threatened with sanctions by a federal judge for misleading statements made during the case.
Senators sent a letter to SEC Chairman Gary Gensler stating that public confidence in the Commission's enforcement actions, motives and professionalism is undermined by such incidents. The letter was also signed by Thom Thillis, Bill Hagerty, Cynthia Lummis and Katie Boyd Britt.
The case against Utah-based firm DEBT Box has been particularly challenging for the SEC. In a statement in December, Judge Robert Shelby accused SEC lawyers of making misleading statements and possible deception. SEC attorneys are accused of misrepresenting material facts in seeking a temporary restraining order and freezing of the crypto company's assets.
Following these accusations, the SEC issued a mea culpa in December. Enforcement chief Gurbir Grewal acknowledged the department had “fallen short”, apologized for its actions and promised to provide mandatory training for staff involved in the case.
The senators' letter reflects the rising stakes of the case. Senators are using the incident to further their concerns about Gensler's administration, which critics argue is politically motivated, especially regarding crypto.
“It is unreasonable for any federal agency to operate in such an unethical and unprofessional manner,” the senators wrote. They suggested that other enforcement cases “may also merit review” and that the SEC's proposed employee training solution would not be sufficient.
Industry groups also reacted to the lawsuit. American Securities Association President and CEO Chris Iacovella echoed the senators' criticism, saying Grewal's department deliberately misled a federal court in pursuit of a political agenda against an industry the SEC dislikes.
*This is not investment advice.