Coinbase unfreezes Debt Box assets amid SEC controversy Coinbase unfreezes Debt Box assets amid SEC controversy
Coinbase said it wouldn't freeze Debt Box assets until the SEC explained why they should.
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Updated: Feb. 13, 2024 at 1:06 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
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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Coinbase
Coinbase is a digital currency exchange and wallet service that allows individuals to buy, sell, and store digital currencies, such as Bitcoin, Ethereum, and Litecoin.
Paul Grewal is the Chief Legal Officer of Coinbase where he is responsible for Coinbase’s legal, compliance, global intelligence, risk management and government relations groups.