- Federal judge says SEC misrepresented information in lawsuit against DEBT Box.
- Coinbase Chief Legal Officer Paul Grewal said regulator was wasting taxpayers' money.
- Ruling was the latest setback for Gary Gensler's crackdown on crypto industry.
Coinbase’s top lawyer slammed the US Securities and Exchange Commission for wasting taxpayer money after a judge sanctioned the regulator on Monday for abusing its power in a case involving another crypto venture.
“The worst part of all: guess who pays the sanctions? You, me and every US taxpayer,” Paul Grewal, Coinbase’s chief legal officer, wrote in a post on X on Monday.
“The commission just foisted a bill onto every one of us for their litigation misconduct.”
Grewal was among the crypto proponents who took to X to express their ire after US District Court Judge Robert Shelby criticised the SEC for committing a “gross abuse of power” in a lawsuit the agency filed against DEBT Box, a crypto platform.
Restraining order
The SEC alleged that DEBT Box was running a fraudulent crypto business. It asked the court for a restraining order and to freeze the company’s assets.
The court granted the restraining order, but Shelby later found that the SEC had misrepresented information given to the court.
On Monday, he ordered the regulator to pay DEBT Box’s attorneys’ fees and other costs arising from the restraining order the SEC had sought against the company.
Shelby’s decision is a severe rebuke to the SEC under Chair Gary Gensler, which has brought a barrage of enforcement actions and lawsuits against the crypto industry.
The industry has in turn accused the SEC of overstepping its legal authority and of a “regulation by enforcement” strategy.
Coinbase CEO Brian Armstrong and Grewal have been among the most vociferous of these critics, as the company faces a court battle of its own with the SEC.
SEC apology
In June, the regulator sued the crypto exchange, accusing it of allegedly operating an unlawful exchange and permitting investors to trade in assets that failed to be registered as securities.
The SEC’s enforcement chief, Gubir Grewal, has apologised for mistakes made in the DEBT Box case, and promised to mandate new training for the regulator’s staff, Bloomberg reported. (Gubir Grewal and Paul Grewal are not related to our knowledge.)
A spokesperson for the SEC told DL News that the agency is “reviewing the decision.”
Sebastian Sinclair is a markets correspondent for DL News. Have a tip? Contact Seb at sebastian@dlnews.com.
