SEC Backtracks on $50M Debt Box Lawsuit Amidst Outcry from Community
Ripple’s Chief Technology Officer and a prominent crypto attorney are expressing their dissatisfaction with the approach taken by the SEC in the Debt Box case, arguing that it constitutes government overreach. The case, which has unfolded with revelations of false claims, has not only caused financial strain but also taken an emotional toll.
The recent decision by the SEC to drop a $50 million fraud lawsuit against Debt Box, along with admissions of making false statements, has prompted criticism from XRP Lawyers, led by John Deaton, who are highly critical of SEC Chairman Gary Gensler’s leadership.
“I have never seen an agency more in need of true leadership,” Deaton tweeted on January 30, 2024.
The SEC’s reversal of its charges against Debt Box has sparked controversy, with federal judges, including Judge Torres, accusing SEC lawyers of hypocrisy in the Ripple lawsuit. This move has cast doubt on the SEC’s legal arguments in other cases, leading to suspicion within the legal community.
In an unexpected twist, an Appellate Court ruled that the SEC’s denial of a spot Bitcoin ETF was arbitrary, leaving Deaton in disbelief. He accused the SEC of attempting to protect dishonest lawyers from consequences despite their guilt. Deaton even suggested a ban on SEC lawyers appearing in cases presided over by the judge, intensifying the legal drama.
Prominent lawyers such as Jeremy Hogan and Bill Morgan have also questioned the SEC’s sudden shifts in strategy, pointing out the agency’s insistence on pursuing a major fraud case only to back off when faced with potential consequences. The frustration among XRP lawyers is evident, with accusations flying that the SEC is playing games in the courtroom.
Even Coinbase’s Chief Legal Officer, Paul Grewal, criticized the SEC for causing trouble and then trying to avoid the consequences. He expressed his disappointment with the SEC’s actions in a tweet, quoting Dolly Parton’s “Bygones.”
Ripple’s CTO, David Schwartz, also called out the SEC for its unethical behavior in the Debt Box case.
The consequences of the SEC’s admission of error were swift and severe, resulting in a 56% drop in the market value of the associated coin. However, the impact goes beyond mere technicalities. John Deaton emphasized that SEC lawyers must consider the real lives and livelihoods affected. This is not just about rules, but about fairness and justice. It is not just a legal battle; it is a plea for the SEC to handle crypto companies responsibly and fairly. People are watching and demanding fairness and justice, not just legal action.
Did you know? Ripple CEO has halted IPO plans in the USA, with the “hostile” SEC being blamed as the cause.