Coinbase unfreezes Debt Box assets amid SEC controversy

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Coin­base has lift­ed the freeze on Debt Box’s assets after dis­cov­er­ing dis­crep­an­cies in the Secu­ri­ties and Exchange Commission’s (SEC) rep­re­sen­ta­tion of its case against the firm.

In a Feb. 13 post on social media plat­form X (for­mer­ly Twit­ter), Paul Gre­w­al, Coin­base chief legal offi­cer, high­light­ed the SEC’s flawed actions, say­ing the tem­po­rary restrain­ing order (TRO) against Debt Box was “taint­ed by SEC’s mis­in­ter­pre­ta­tions” and crit­i­cized the reg­u­la­to­ry body’s lack of imme­di­ate rec­ti­fi­ca­tion upon acknowl­edg­ing its decep­tive stance.

Accord­ing to Gre­w­al, Coin­base chal­lenged the SEC’s order because the reg­u­la­tor “sat silent­ly” instead of “imme­di­ate­ly pulling its order after admit­ting that it deceived the Court.” The exchange attempts to get an expla­na­tion from the author­i­ties proved futile as it was met with “more silence.”

Con­se­quent­ly, Coin­base opt­ed to unfreeze the assets, cor­rect­ing the error while await­ing clar­i­ty from the SEC, which has remained silent.

“We have now right­ed that wrong by unfreez­ing the assets,” Gre­w­al said.

Gre­w­al fur­thered that the SEC’s move to dis­miss the case with­out prej­u­dice and manda­to­ry train­ing was insuf­fi­cient redress for its actions.

SEC vs. Debt Box

The SEC’s pur­suit of Debt Box has ignit­ed a firestorm of cri­tique regard­ing its han­dling of the emerg­ing cryp­to industry.

Con­tro­ver­sy flared when rev­e­la­tions sur­faced about the SEC’s attor­neys pre­sent­ing false and mis­lead­ing evi­dence in their bid for a TRO against DEBT Box. US Dis­trict Judge Robert Shel­by demand­ed expla­na­tions from the lawyers on why they shouldn’t face sanc­tions for their actions.

Fol­low­ing scruti­ny, the SEC acknowl­edged its error and pledged to pre­vent such laps­es. They sought the court’s accep­tance of a motion to dis­miss the action with­out prej­u­dice as their sole penalty.

Yet, crit­i­cism of the SEC’s han­dling of the Debt Box case didn’t relent. Sev­er­al cryp­to stake­hold­ers and US law­mak­ers, includ­ing JD Vance, Thom Tillis, Bill Hager­ty, Cyn­thia Lum­mis, and Katie Boyd Britt, con­demned the regulator’s con­duct as “uneth­i­cal and unprofessional.”

“Regard­less of whether Com­mis­sion staff delib­er­ate­ly mis­rep­re­sent­ed evi­dence or unknow­ing­ly pre­sent­ed false infor­ma­tion, this case sug­gests oth­er enforce­ment cas­es brought by the Com­mis­sion may be deserv­ing of scruti­ny. It is dif­fi­cult to main­tain con­fi­dence that oth­er cas­es are not pred­i­cat­ed upon dubi­ous evi­dence, obfus­ca­tions, or out­right mis­rep­re­sen­ta­tions,” the law­mak­ers wrote.

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