Two Securities and Exchange Commission (SEC) attorneys — Michael Welsh and Joseph Watkins — have resigned following criticism from a federal judge for their handling of a crypto case involving Digital Licensing Inc.’s DEBT Box platform.
The SEC lawsuit was marked of false statements and was devoid of evidence. Judge Robert Shelby accused the SEC of misconduct by ordering partial payment of DEBT Box’s legal fees. Welsh and Watkins were charged with false statements and inadequate presentation of evidence.
The Securities and Exchange Commission accused DEBT Box of defrauding investors of $49 million, prompting an asset freeze that was later lifted due to misleading statements. Gurbir Grewal, head of the SEC’s enforcement division, apologized for the department’s conduct, appointed new legal representatives and ordered staff training.
This case highlights the challenges of regulating emerging financial technologies such as cryptocurrencies and the importance of thorough and accurate legal procedures.
The resignations and judicial criticism also underscore the accountability needed in regulators to maintain public trust and ensure fair application of financial laws. Such incidents may prompt regulators to rethink their approaches to law enforcement and litigation, highlighting the need for transparency, integrity and diligence in prosecuting entities operating in the rapidly evolving cryptocurrency landscape.
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