SEC Lawyers Resign After Controversial Sanctions in Debt Box Case

By: Eliza Bennet

Two Securities and Exchange Commission (SEC) lawyers, named Michael Welsh and Joseph Watkins, have resigned following the gross mishandling of legal proceedings against DEBT Box, a Utah-based crypto firm. They were on the verge of termination, leading to their resigned in April.

It transpired during the case that both lawyers had misrepresented and made false statements in court to obtain a temporary restraining order and asset freeze against DEBT Box. Among them, they wrongfully suggested that DEBT Box had shut down accounts 48 hours before a court hearing.

The SEC publicly admitted to these inaccuracies in December 2023 and opted to dismiss the case in January, a move that was challenged by DEBT Box. Federal Judge Robert Shelby then imposed sanctions on the SEC for an abuse of power in March, ordering them to cover the legal fees in the case.

Future resignations within the SEC seem unlikely, despite rumours surrounding the potential resignation of current SEC chair Gary Gensler. This rumor was debunked by Eleanor Terret, a reporter for FOX Business, who suggested that Gensler could lose his position in the upcoming US elections, but it is unlikely he would voluntarily step down.