A
federal
judge
on
Thursday
warned
Securities
and
Exchange
Commission
(SEC)
attorneys
that
he
may
sanction
them
for
allegedly
convincing
a
court
to
freeze
a
crypto
firm’s
assets
under
“false
and
misleading”
pretenses,
a
court
filing
shows.
According
to
an
order
issued
by
U.S.
District
Judge
Robert
Shelby
of
the
U.S.
District
Court
in
Utah,
the
SEC’s
attorneys
could
be
sanctioned
for
making
“misleading”
arguments
about
crypto
project
Debt
Box’s
alleged
efforts
to
transfer
its
assets
and
investors’
funds
overseas,
leading
a
court
to
freeze
the
project’s
bank
accounts.
The
SEC’s
“misrepresentations…
undermined
the
integrity
of
the
case’s
proceedings,”
in
addition
to
causing
Debt
Box
“irreparable
harm,”
Judge
Shelby
said
in
an
order.
Sanctions
are
penalties
a
court
imposes
on
individuals
who
sign
statements
they
know
to
be
false
or
otherwise
violate
court
procedures,
according
to
Law.com‘s
legal
dictionary.
In
civil
law,
sanctions
are
usually
imposed
in
the
form
of
monetary
fines,
according
to
Law.com.
A
federal
judge
first
slapped
Debt
Box
with
a
temporary
restraining
order,
restricting
its
access
to
its
assets,
in
August.
However,
he
later
dissolved
the
order
after
Debt
Box
demonstrated
it
had
neither
moved
funds
outside
the
U.S.,
nor
closed
its
bank
accounts
two
days
before
a
hearing
over
the
SEC’s
request
to
freeze
its
funds,
Debt
Box’s
lawyers
said
in
a
filing.
The
SEC’s
Utah
office
did
not
immediately
respond
to
a
request
for
comment.
The
SEC
first
sued
Debt
Box
in
July,
alleging
the
company
schemed
to
sell
unregistered
securities
called
“node
licenses,”
beginning
in
2021.
Debt
Box
told
investors
the
licenses
would
mine
cryptocurrency
that
would
increase
in
value,
but
they
were
actually
minting
the
crypto
themselves
using
computer
code,
the
SEC
alleged
in
its
original
complaint.
In
Thursday’s
order,
Judge
Shelby
asked
the
SEC’s
attorneys
to
respond
to
his
findings
that
their
arguments
alleging
Debt
Box
had
attempted
to
move
its
funds
overseas
lacked
context
and
were
not
factual.
The
regulator
has
two
weeks
to
respond
to
the
inquiry,
according
to
the
order.
