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Anti-Crypto SEC Lawyers Step Down After Rebuke from Federal Judge

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Mon, 22/04/2024 - 20:10
Anti-Crypto SEC Lawyers Step Down After Rebuke from Federal Judge
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Anti-crypto lawyers Michael Welsh and Joseph Watkins were forced to leave the U.S. Securities and Exchange Commission (SEC). 

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This came after the regulatory agency was sanctioned by Robert Shelby, a federal district court judge in Salt Lake City, over its "gross abuse" of power in the infamous DEBT Box case. 

The agency took DEBT Box to court back in July, accusing it of multi-million dollar fraud. The agency managed to obtain a temporary restraining order against the embattled Utah-based firm, but it was later accused of misrepresenting some crucial facts in the case by the defendants. The SEC's evidence was presented in an inappropriate manner. For example, its claims about the firm's alleged overseas transfers were based on a YouTube video. 

SEC attorneys ended up apologizing for the mishap, with SEC enforcement chief Gurbir Grewal acknowledging that the agency "fell short" of its standards.

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The judge ended up denying the SEC's request to waive sanctions since the agency had damaged the integrity of the proceedings. The SEC was forced to pay the firm's attorneys’ fees.

Bloomberg, citing an anonymous source, claims that Welsh and Watkins were on the verge of being fired by the SEC. Hence, they decided to resign after the agency got sanctioned by the court in a rare move.

Some critics of the problem with the SEC's approach to crypto is not limited to just two lawyers. "Picking a couple of scapegoats to throw under the bus does not equate to real accountability when the problem is endemic to an organization," James "MetaLawMan" Murphy said on the X social media network.  

"Imagine hiring a lawyer that works for an employer that fosters AND EXCUSES this behavior... until a judge has to step in. And even then the SEC's General Counsel's office commits the SAME SIN. Spare me until those lawyers resign in disgrace as well," finance lawyer Scott Johnsson commented on social media. 

The latest development might play into the hands of Ripple, which is on track to file its response to the SEC's request for a $2 billion fine. 

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