SEC Reveals Date Errors in Debt Box & iX Global Case 2023
The SEC is under scrutiny for errors in its securities fraud case against Debt Box and iX Global.
In essence, the SEC Reveals Date Errors in Debt Box defendants initiated fund transfers from the US to the UAE.
This misinformation created a false sense of urgency, influencing the court’s decision to grant the SEC a TRO early in the case.
Upon discovering the date errors, the court dissolved the TRO in October and later ordered the SEC to justify why sanctions shouldn’t be imposed.
In response on December 21st, the SEC admitted the date errors but argued against sanctions.
The Commission must balance its anti-fraud efforts with accuracy and transparency.
During the July 28, 2023, hearing, Commission counsel unintentionally provided inaccurate information. Unfortunately, the error wasn’t corrected upon discovery, and certain statements were presented as direct factual assertions instead of inferences.
The Commission acknowledges the Court’s concerns, sincerely regrets these mistakes, and is committed to upholding accuracy in its duties.
In light of the errors, the SEC states it is
taking steps to ensure those errors are not repeated in this action or other proceedings.
“Senior attorneys have been enlisted to oversee the Debt Box and iX Global case.“
Following the issuance of the Order to Show Cause, a fresh team of attorneys, mainly from the Commission’s Office of the General Counsel, was tasked with a comprehensive examination. Their focus was on addressing the Court’s queries, reviewing the events prompting the Court’s concerns, and formulating a response to the Order to Show Cause.
Additionally, the Division of Enforcement will implement mandatory training for all staff engaged in investigations and litigation. The training will emphasize the responsibilities of accuracy, candor, and the prompt correction of any inaccuracies as soon as they are identified.
Arguing against sanctions, the SEC goes on to claim
The circumstances here don’t meet the misconduct Rule 11 addresses. Commission staff didn’t act in bad faith to support sanctions under the Court’s inherent authority.
The Commission asserts that its counsel and staff didn’t intend to mislead the Court or file statements for improper purposes. Instead, representatives inaccurately characterized factual bases, failed to label inferences, and didn’t clarify their foundations or correct inaccuracies promptly.
Sanctions are unnecessary in this context. Even if the Court finds bad faith and imposes sanctions, sovereign immunity would prevent monetary penalties against the Commission.
The court will soon decide on sanctions against the SEC. I’ll provide an update once a decision is made. Regardless of the outcome, the SEC’s case against Debt Box and iX Global will proceed. A recent detail from the SEC’s filing includes specific amounts and dates of investor funds transferred from the US to the UAE.
By December 2022, approximately $1.35 million of investor funds from the United States had been transferred into the foreign bank account of IX Ventures FZCO, an entity headquartered in the United Arab Emirates and allegedly controlled by Defendants Jason and Jacob Anderson.
Certain Defendants were depleting assets in their U.S. bank accounts beginning as early as spring of 2021. For instance, as of May 30, 2023, the balance of accounts associated with DEBT Box had decreased by over $33 million, leaving an ending balance of approximately $367,000.
And as of May 30, 2023, the balance of accounts associated with iX Global, a multi-level marketing company allegedly controlled by Defendant Martinez that partnered with DEBT Box to market DEBT Box’s crypto asset securities, decreased by over $49 million, leaving an ending balance of approximately $763,000.
On June 30,
This doesn’t resemble the conduct of authentic US MLM firms. It’s the laundering of illicit funds, gained through securities fraud, totaling over $110 million.
With or without sanctions, the evidence suggests the SEC will succeed in court.
