TLDR
- The SEC is closing its Salt Lake City regional office, which will reduce the number of its regional branches from 11 to 10.
- The decision follows a notable decrease in the office’s workforce, including individuals who departed due to reported involvement in the unsuccessful litigation against DEBT Box.
- Two SEC lawyers, Michael Welsh and Joseph Watkins, who were based in the Salt Lake office, resigned in April after a federal judge criticized the SEC for “gross abuse of power” in the DEBT Box case.
- The judge not only threw out the case against DEBT Box but also fined the SEC over $1.8 million for its unethical tactics and misleading the court to gain an unfair advantage.
- The SEC will handle Utah enforcement matters from its Denver office going forward, and the closure is not expected to disrupt regulatory oversight for businesses in Utah.
The U.S. Securities and Exchange Commission (SEC) has announced the impending closure of its Salt Lake City regional office, a move that comes in the wake of the regulator’s failed enforcement action against cryptocurrency platform DEBT Box.
The Salt Lake City office, which is the SEC’s only regional outpost with enforcement authority for a single state, has seen a significant decrease in its workforce, including the departure of key individuals involved in the DEBT Box case.
In a June 4 notice, the SEC cited the Salt Lake City office as its least-staffed location and noted that it had recently lost a substantial number of employees. The closure of this office will reduce the SEC’s regional branches from 11 to 10. The regulator stated that the decision was based on considerations of budget and organizational efficiency and that there are no plans to close any other regional offices.
The announcement follows a tumultuous few months for the Salt Lake City office, particularly in connection with its failed enforcement action against DEBT Box.
In July 2023, the SEC filed a lawsuit against the company, alleging that it ran a $49 million fraud by selling “node licenses” that promised profits from mining various cryptocurrencies. However, the agency claimed that these tokens were never actually mined, casting doubt on the entire scheme.
The case took a dramatic turn when a federal judge harshly criticized the SEC for committing a “gross abuse of power” by using false information to freeze DEBT Box’s assets.
???? We have some fantastic news to share with our D.E.B.T. Box community today!
The U.S. District Court for the District of Utah has officially dismissed the SEC's case against us without prejudice. This means the case is closed, and any future action by the SEC would have to go… pic.twitter.com/aGiNVxMYbz
— D.E.B.T. (@TheDebtBox) May 28, 2024
Two SEC lawyers, Michael Welsh and Joseph Watkins, who were based in the Salt Lake office, resigned in April following the judge’s rebuke. It remains uncertain whether their resignations contributed to the “significant attrition” mentioned by the SEC.
Last week, the judge dealt a major blow to the SEC by not only dismissing the case against DEBT Box but also fining the regulator over $1.8 million for its unethical tactics.
The court discovered that the SEC had misled the judge to gain an unfair advantage in the case.
Moving forward, the SEC will handle Utah enforcement matters from its Denver office instead of Salt Lake City. This change is not expected to cause any disruption in regulatory oversight for businesses in Utah, as the SEC’s examination oversight for the state had already been transferred to Denver years ago.
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