SEC freezes DEBT Boxs assets over $50M node license sham

By: Michael Wilson

SEC freezes DEBT Boxs assets over $50M node license sham

August 4, 2023 6:57 AM

DEBT Box, a blockchain mining software firm, has been accused of misleading investors about its role in crypto mining and "node licenses."


The US Securities and Exchange Commission (SEC) has acquired a temporary asset freeze against Digital Licensing Inc, a Utah-based crypto company, accusing it of running a $50 million illegal crypto scheme.


On August 3, the SEC revealed→ that it had successfully sued Digital Licensing Inc., a company known as "DEBT Box," and had secured a temporary asset freeze, restraining order, and other emergency remedies.


The enforcement action involved 13 defendants, including the firm's four partners, Jason Anderson, Jacob Anderson, Schad Brannon, and Roydon Nelsonand.


Since March 2021, the SEC claims the firm has been selling unregistered securities known as "node licenses."

 

A screenshot of DEBT Box's node licensing explanation. Source: Debt Box


DEBT Box, according to its website, is a decentralized eco-friendly blockchain "where crypto meets commodities." It promises to sell "software mining licenses" that must be activated before mining can commence.


Daily benefits are promised through a variety of "projects" that appear to be related to a variety of businesses such as real estate, commodities, agriculture, and technology.

 

DEBT Box supports "mining" projects. Source: thedebtbox.com


As of August 3rd, the company had accumulated 30,000 X (Twitter→) followers. It has its own token, DEBT, which has dropped 52% following the SEC action.


According to the SEC's lawsuit, the company misrepresented its ability to mine cryptocurrency tokens on these "nodes" and promised unrealistically high returns for investors by saying that the rising value of these tokens would be driven by revenue-generating enterprises.


The SEC described the node licenses as a "sham" aimed to conceal the fact that the complete supply was issued by the firm using blockchain technology in a statement.


Tracy Combs, the head of the SEC's Salt Lake Regional Office, stated:


"We maintain that DEBT Box and its directors misled investors regarding almost every substantial element of their unlawful issuance of securities, notably falsely claiming to be involved in crypto asset mining," the complaint states.


According to the SEC, the defendants also allegedly misled about the earnings of firms that were allegedly increasing the token values.


The SEC is asking for a permanent injunction, the return of illegally obtained gains, and damages against DEBT Box.