Two
lawyers
for
the
U.S.
Securities
and
Exchange
Commission
(SEC)
were
forced
to
resign
after
a
federal
judge
sanctioned
the
agency
last
month
for
committing
a
“gross
abuse
of
power”
while
attempting
to
secure
a
temporary
restraining
order
against
Utah-based
crypto
company
Debt
Box,
according
to
a
Monday
report
from
Bloomberg.
Michael
Welsh,
a
former
lead
attorney
on
the
Debt
Box
case,
and
Joseph
Watkins,
an
investigative
attorney
whose
declaration
served
as
the
foundation
for
the
SEC’s
case
against
Debt
Box,
were
reportedly
forced
to
step
down
or
else
be
terminated,
according
to
the
report,
which
cited
people
familiar
with
the
situation.
A
spokesperson
for
the
SEC
declined
to
comment,
but
an
April
15
court
filing
declared
that
Welsh
“is
no
longer
employed
by
the
Securities
and
Exchange
Commission.”
Watkins’
LinkedIn
page
says
he
is
still
employed
by
the
agency.
Last
December,
U.S.
Chief
District
Judge
in
the
District
of
Utah
Robert
Shelby,
wrote
that
he
was
“concerned
the
Commission
made
materially
false
and
misleading
representations”
in
their
pursuit
of
the
restraining
order
that
“undermined
the
integrity
of
the
proceedings.”
Following
Shelby’s
order,
the
SEC
filed
a
response
with
the
court
admitting
that
its
team
“fell
short”
of
standards
but
called
sanctions
“unwarranted.”
In
addition
to
apologies
from
Welsh
and
Watkins,
the
SEC’s
Division
of
Enforcement
Director
Gurbir
Grewal
personally
apologized
for
his
agency’s
“shortfall”
in
the
case
in
a
Dec.
21,
2023
court
filing.
The
agency
also
moved
to
dismiss
the
case
without
prejudice
–
meaning
they
would
retain
the
ability
to
refile
the
case
against
Debt
Box
–
but
Shelby
denied
the
motion,
arguing
that
his
court
had
“not
yet
had
occasion
to
evaluate
the
underlying
merits
of
[the]
action.”
Apologies
were
not
enough
to
get
the
SEC
out
of
hot
water
–
in
February,
five
Senate
Republicans
sent
SEC
Chairman
Gary
Gensler
a
letter
blasting
the
agency
for
conducting
itself
in
“an
unethical
and
unprofessional
manner”
and
suggesting
that
“other
enforcement
cases
brought
by
the
Commission
may
be
deserving
of
scrutiny.”
In
March,
Shelby
ruled
that
the
SEC
had
committed
a
“gross
abuse
of
power”
and
ordered
it
to
pay
legal
costs
for
Debt
Box.
The
case
is
ongoing.
UPDATE
(April
22,
2024
at
19:50
UTC):
Adds
that
the
SEC
declined
to
comment.
