SEC to Close Salt Lake Regional Office Following Judge’s $1.8M Fee Order

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The United States Securities and Exchange Commission (SEC) announced plans to close its Salt Lake Regional Office in 2024, one of its eleven regional offices nationwide. The closure comes after a federal judge ordered the regulator to pay approximately $1.8 million in attorney and receivership fees, following a contentious lawsuit.

SEC Closes Salt Lake Office

The decision to shut down the Salt Lake office follows significant staff attrition, according to a June 4 notice from the SEC. 

The regulator plans to shift the operations from Salt Lake City to its Denver office to consolidate resources and maintain efficiency. This move marks a notable shift in the SEC’s regional enforcement strategy, especially amid growing scrutiny of its activities in the crypto space.

The DEBT Box Case

The closure was announced roughly a week after the US District Judge Robert Shelby dismissed the SEC’s civil lawsuit against Digital Licensing Inc., which operates under the name DEBT Box

The SEC had filed the lawsuit in July 2023, accusing DEBT Box of running an illegal $50 million cryptocurrency scheme. However, in a critical turn of events in March, Judge Shelby found that the SEC had “engaged in bad faith conduct” when it sought a temporary restraining order to freeze DEBT Box’s assets.

SEC Faces Severe Blowback

Judge Shelby’s ruling was a significant rebuke to the SEC, leading to sanctions that required the commission to cover all attorney fees and costs related to the improper restraining order.

Specifically, the SEC was ordered to pay around $1 million in attorney fees and costs, along with $750,000 for receiver fees and costs. The judge’s decision highlighted serious procedural missteps by the SEC, adding to the challenges faced by the agency in its enforcement actions.

The fallout from the DEBT Box case appears to have had a broader impact on the SEC’s regional operations. Reports indicate that two lawyers based in the Salt Lake office resigned over the handling of the case. 

While the SEC has not confirmed whether these resignations directly contributed to the office’s closure, the timing suggests a possible link to the “significant attrition” mentioned in the commission’s notice.

Crimes in Crypto

The SEC’s decision to close the Salt Lake office comes at a time when the agency is actively pursuing several high-profile enforcement actions against major crypto firms. These include ongoing cases against Coinbase, Binance, Kraken, and Ripple, among others. Despite setbacks like the DEBT Box case, the SEC continues to assert its regulatory authority over the rapidly evolving crypto industry.

In May, there was a notable development in the SEC’s case against Terraform Labs and its co-founder Do Kwon. Lawyers for Terraform Labs announced an in-principle settlement with the SEC, indicating that even amid contentious battles, there is room for negotiation and resolution.

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