The Securities and Exchange Commission (SEC) has swooped in on blockchain mining software firm DEBT Box after the company was charged with misleading investors about its crypto mining activities and the sale of what the SEC has deemed 'sham' node licenses. The financial watchdog has obtained a provisional asset freeze against the Utah-based firm, Digital Licensing Inc, asserting the company's involvement in a deceptive $50 million crypto scheme.
As per the SEC's announcement on August 3rd, 2023, the enforcement action has culminated in a temporary asset freeze, restraining order, and emergency relief against DEBT Box, which is the operating name of Digital Licensing Inc. Jason Anderson, Jacob Anderson, Schad Brannon, and Roydon Nelson and, the four key figures at the helm of the firm, along with thirteen other implicated individuals, have been targeted in the regulatory action.
We obtained a temporary asset freeze, restraining order, and other emergency relief against DEBT Box and its four principals, Jason Anderson, his brother Jacob Anderson, Schad Brannon, and Roydon Nelson in connection with a fraudulent scheme to sell crypto asset securities.
— U.S. Securities and Exchange Commission (@SECGov) August 3, 2023
The 'Node Licenses' Ruse
The accusations brought forth by the SEC relate to the sale of unregistered securities since March 2021. These securities were deceptively packaged as "node licenses." On its website (1), DEBT Box touts itself as a green, decentralized blockchain where commodities converge with cryptocurrency. The company claimed to sell "software mining licenses," which necessitated activation before initiating mining operations.
The firm allured investors by promising daily rewards through a slew of "projects" seemingly connected to diverse sectors such as real estate, technology, agriculture, and commodities. DEBT Box's native token, dubbed DEBT, witnessed a staggering 52% fall in value following the SEC's enforcement.
Revealing the Sham
In its complaint, the SEC expressed that DEBT Box (2) falsely assured that these "nodes" would churn out crypto tokens via mining, and revenue-generating businesses would bolster the token values. This setup was designed to paint a picture of enormous potential gains for investors.
However, the SEC has denounced the node licenses as a "sham," purporting to mask the reality that the company controlled the entire token supply through blockchain code. Moreover, the SEC alleged that the defendants made misleading statements about the revenues of businesses that were supposedly escalating the token values.
The SEC now demands permanent injunctions, the return of illicit gains, and levying civil penalties against DEBT Box.
