SEC Lawyers Resign After ‘Gross Abuse’ of Power in Debt Box Crypto Case

Following Shelby’s order, the SEC filed a response with the court admitting that its team “fell short” of standards but called sanctions “unwarranted.” In addition to apologies from Welsh and Watkins, the SEC’s Division of Enforcement Director Gurbir Grewal personally apologized for his agency’s “shortfall” in the case in a Dec. 21, 2023 court filing.

The agency also moved to dismiss the case without prejudice – meaning they would retain the ability to refile the case against Debt Box – but Shelby denied the motion, arguing that his court had “not yet had occasion to evaluate the underlying merits of [the] action.”

Apologies were not enough to get the SEC out of hot water – in February, five Senate Republicans sent SEC Chairman Gary Gensler a letter blasting the agency for conducting itself in “an unethical and unprofessional manner” and suggesting that “other enforcement cases brought by the Commission may be deserving of scrutiny.”