Several Republican senators have criticized the SEC’s recent mishandling of the DEBT Box case as “unethical” and raised questions about the watchdog’s regulatory approach under the leadership of chair Gary Gensler.
The five senators said in a letter dated Feb. 7 that the SEC’s blunders in the case were “unacceptable” and raised several concerns about its operations.
The SEC accused DEBT Box of operating a crypto asset fraud scheme in August 2023. The regulator subsequently obtained a temporary asset freeze, restraining order, and other emergency relief against the firm.
Later court proceedings determined that those requests were granted based on false information from SEC counsel. The SEC admitted to inaccuracies in December and moved to drop the case entirely in late January.
Senators acknowledged that the SEC’s errors were likely due to “negligence rather than malevolence” but said that “even this charitable explanation is unacceptable.”
The senators questioned how SEC counsel could be unfamiliar with the facts of a case and suggested that other enforcement cases could require scrutiny. They expressed concerns that other SEC cases may be based on “dubious evidence, obfuscations, or outright misrepresentations.”
The senators did not ask the SEC to perform any specific actions, nor did they request answers to any particular questions.
Instead, the letter appears to be just one part of those senators’ broader opposition to the SEC’s treatment of cryptocurrency. The letter is signed by five Republican senators known for their crypto-friendly positions: Cynthia Lummis, Thom Tillis, Bill Hagerty, Katie Boyd Britt, and J.D. Vance.