unprecedented sanctions
Fortune’s Leo Schwartz reported on X late yesterday that District Judge Robert Shelby, an Obama appointee, has sanctioned the SEC for a “gross abuse of power” in the DEBT Box lawsuit. Schwartz says Judge Shelby “found the agency misrepresented facts to obtain a restraining order against a Utah-based crypto firm.” Read more (subscription).
The Block notes that the SEC will have to pay DEBT Box’s legal costs and “sanctions.” But, is it all too little, too late for DEBT Box?
Retweeting the sanctions news, House Financial Services Chair Patrick McHenry (R, NC) didn’t hold back on X last night: “Chair [Gary] Gensler’s enforcement team’s egregious misconduct will have broad implications on SEC authority beyond his crypto crusade. Gensler requested more funding for enforcement last year, now a judge calls out the SEC’s abusive and deceptive legal practices. This must end.”
what you should know: But, is it all too little, too late for DEBT Box? The company’s business was destroyed due to the Temporary Restraining Order (TRO) put on it at the request of the SEC and approved by the Court. The biggest ramifications may be the political calculus going forward between Chair Gensler and Democratic leadership. Do they soften their digital assets stance? The rumored April HFS oversight meeting with Chair Gensler ought to be good theater.
SEC overreach
A House Financial Services (HFS) Capital Markets Subcommittee hearing tomorrow titled, “SEC Overreach: Examining the Need for Reform” will be something to keep an eye on even though the focus is not digital assets, specifically. But, the just-announced DEBT Box outcome will no doubt be top-of-mind.
Overall, the House majority Republicans appear to be upping the ante against the SEC and its Chair Gary Gensler at the hearing with 12 new bills and another joint resolution devoted to reining in the securities agency. From the hearing memo: “This hearing will examine Chair Gensler’s approach to policymaking at the SEC, which has sparked significant concerns.”
See the hearing page. And, read the Committee Memorandum.
The list of witnesses to appear in front of the Subcommittee and its Chair Ann Wagner (R, MO) will include the following at least (more to come… Better Markets from Dem leadership, perhaps?): Jennifer Schulp, Director of Financial Regulation Studies, Cato Institute; David Burton, Senior Fellow, The Heritage Foundation; John Gulliver, Executive Director, Committee on Capital Markets Regulation.
what you should know: Last month, a Joint Resolution [H.J.R.109] rescinding the Securities and Exchange Commission’s (SEC) SAB 121 made it successfully out of an HFS markup with bipartisan support and rebuked the SEC for its overreach when it comes to crypto custody for traditional financial firms. A House Floor vote is next for the resolution as well as progress in the Senate. Continue reading “SEC Cited For Abuse Of Power In DEBT Box Case; Fed Chair Bitcoin”