Earlier this month, the Securities and Exchange Commission sought and secured emergency relief from a federal court, including a restraining order and a temporary asset freeze, against Digital Licensing Inc., which did business as “DEBT Box,” as well as eighteen individual defendants. The SEC alleged that the defendants perpetrated a fraudulent securities scheme involving the sale of around $50 million in crypto assets to hundreds of investors based in the United States.
The SEC’s complaint contends that defendants carried out a fraud commencing in March 2021 involving the sale of unregistered securities in the form of “node licenses.” The defendants represented to investors that the node licenses would create crypto asset tokens via mining activity that would increase in value and thereby achieve spectacular profits, the SEC Complaint alleged.
In truth and in fact, as the SEC maintains, the node licenses were a sham designed to hide the fact that each token’s total supply was created by DEBT Box by instantaneously using blockchain code. The SEC further alleged that DEBT Box, along with its principals and certain other defendants, materially misrepresented to DEBT Box investors the extent of the revenues of the key businesses that purportedly drove the tokens’ value.
The SEC’s charges, which varied based upon the particular defendant, included selling unregistered securities in violation of Sections 5(a) and 5(c) of the Securities Act of 1933 (“Securities Act”), engaging in fraudulent conduct in contravention of Section 17(a) of the Securities Act and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 (“Exchange Act”), and operating as unregistered brokers in violation of Section 15(a) of the Exchange Act. The SEC is seeking permanent injunctions, digorgement of alleged ill-gotten gains, and civil penalties.
For the protection of investors, the Court appointed a temporary Receiver over DEBT Box to maintain the status quo and to marshal assets until a final adjudication of the case is made.
Help from a Crypto Fraud Defense Lawyer
David Chase, Esq. is a seasoned SEC defense lawyer who aggressively represents individuals and companies in SEC investigations throughout the country. He is experienced in defending SEC investigations involving crypto fraud, insider trading, Ponzi Schemes and securities registration violations. If you have just received a SEC subpoena, or are under SEC investigation, you may contact David toll-free at: 800-760-0912 or e-mail at: david@davidchaselaw.com, and can visit the Firm’s website for more information and content at: www.securitiesfrauddefense.com.
