As a result of its ongoing crackdown on the nascent crypto industry and mounting unfavorable results in its cases against digital asset platforms, the US Securities and Exchange Commission (SEC) has announced the impending closure of its regional office in Salt Lake City, citing “significant attrition.”
The Salt Lake City office is the SEC’s sole regional outpost, and its enforcement authority is limited to a single state. Utah’s jurisdiction will now be transferred to the SEC’s Denver office while the regulator affirms its commitment to keeping other regional offices open.
SEC’s Loss In Debt Box Crypto Case
According to the Wall Street Journal, the decision to close the Salt Lake City office comes after a turbulent period, primarily associated with the SEC’s failed enforcement action against Digital Licensing, also known as Debt Box, a cryptocurrency platform.
People familiar with the matter clarify that the office closure is related to, but not solely a consequence of, the SEC’s setback in the Debt Box case.
In August of the previous year, the Salt Lake City office secured a temporary asset freeze and restraining order against Debt Box, as it accused the company and its principals of defrauding investors of at least $49 million.
However, in November, Judge Robert Shelby expressed concerns over material misrepresentations by SEC lawyers from the Salt Lake City office while obtaining the temporary restraining order.
The following month, SEC enforcement director Gurbir Grewal apologized in a court filing, and in January, the agency filed a motion to dismiss the case.
SEC Ordered To Pay $1.8 Million In Fees
Despite initial admissions of mistakes and apologies for the “shortfall” in the case, the SEC’s attempt at damage control proved ineffective. In an 80-page ruling, Judge Shelby imposed sanctions on the SEC, requiring them to cover Debt Box’s legal fees related to the temporary restraining order. Furthermore, the judge denied the SEC’s motion to dismiss the lawsuit without prejudice.
The SEC faced another setback when ordered to pay Debt Box approximately $1.8 million in fees, including receiver fees and legal expenses.
Debt Box expressed satisfaction with the dismissal, characterizing it as a significant victory. However, the SEC’s legal entanglements within cryptocurrency are far from over.
The regulatory agency continues to face ongoing challenges with prominent cryptocurrency companies such as Binance, Kraken, Ripple, and Coinbase, in addition to its unresolved conflict with Debt Box.
The Salt Lake City office experienced personnel departures after the Debt Box case. Two SEC lawyers, Michael Welsh and Joseph Watkins, resigned in April, while the office’s director, Tracy Combs, also stepped down in May.
As the SEC grapples with the fallout from its failed enforcement action and the closure of its Salt Lake City office, its engagements with major cryptocurrency industry players remain in the spotlight.
Featured image from Shutterstock, chart from TradingView.com