Sen. J.D. Vance (R-Ohio) is among a group of senators asking questions about the SEC's response to the DEBT box. Tom Williams—CQ-Roll Call, Inc., Getty Images
A group of Republican senators sent a letter to Securities and Exchange Commission Chairman Gary Gensler after a federal judge threatened to sanction the company for misleading statements in its lawsuit against crypto company DEBT Box. expressed concern.
“The public must have full confidence in the Commission's enforcement actions, enforcement motives, and professionalism in enforcement,” said Sen. J.D. Vance (R-Ohio) in a statement sent Wednesday. , says the letter, signed by Thom Tillis. RN.C.), Bill Hagerty (R-Tenn.), Cynthia Lummis (R-Wyo.), and Katie Boyd Britt (R-Ala.). “
Since becoming SEC chairman in 2021, Gensler has drawn criticism from members of Congress on both sides of the aisle for his approach to the cryptocurrency industry, which he claims operates outside of compliance with U.S. securities laws. . After the collapse of cryptocurrency exchange FTX in November 2022, Gensler stepped up enforcement actions against major companies such as Coinbase and Binance.
But the case against little-known Utah company DEBTBox is the toughest for regulators after Judge Robert Shelby accused SEC lawyers of misleading statements and possible deception in a December filing. This resulted in a lawsuit. DEBT Box's Shelby and the defendants say the agency's attorneys misrepresented material facts in seeking a temporary restraining order and asset freeze for the virtual currency company.
The SEC filed the actual charges in late December after Mr. Shelby ordered the agency to account for its failures. Enforcement Director General Gurbir Grewal acknowledged that the department had “fallen short”, apologized for its actions and promised mandatory training for the officers involved in the incident.
In a separate filing in late January, the SEC asked Shelby to dismiss the case without prejudice, meaning the charges could be retried later and no further sanctions. argued that it was necessary.
Although Mr. Shelby has not yet filed a response, the DEBT Box defendants are seeking stronger action, including asking the SEC to pay statutory damages and dismiss the prejudicial case against Mr. Shelby. .
Wednesday's letter from Republican senators led by Mr. Vance reflects the growing stakes of this minor lawsuit. Lawmakers are using the episode to air dissatisfaction with Gensler's administration, but critics say it is politically motivated, especially regarding cryptocurrencies. During his tenure, Mr. Gensler also ventured into politically difficult areas, including rulemaking related to environmental, social, and corporate governance (ESG).
“It is unconscionable that any federal agency…can operate in such an unethical and unprofessional manner,” the senators wrote. Additionally, the agency's failures suggest that other enforcement cases “may also merit scrutiny,” adding that the SEC's proposed employee training remedies are not sufficient.
Other industry groups are also responding. In a statement shared with luckChris Iacobella, president and CEO of the American Securities Association, echoed the senators' criticism, saying:[Grewal’s] The department intentionally misled federal courts in order to pursue a political agenda against the industry that the SEC disliked. ”
