SEC Charges DEBT Box and 18 Defendants for Utah-Based Crypto Fraud Scheme

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SEC Charges DEBT Box and 18 Defendants for Utah-Based Crypto Fraud Scheme

Last week, the U.S. District Court for the District of Utah unsealed an SEC complaint against Digital Licensing Inc. (“DEBT Box”) as well as the company’s four principals, Jason Anderson, his brother Jacob Anderson, Schad Brannon, and Roydon Nelson, and 13 other defendants in connection with a fraudulent scheme to sell crypto asset securities to hundreds of U.S. investors that raised approximately $50 million and unspecified amounts of Bitcoin and Ether.

In an emergency move, also announced last week, the SEC also obtained a restraining order against the Utah-based company.

According to the complaint, DEBT Box – whose slogan was “where crypto meets commodities” – engaged in a scheme to sell mining licenses that provided tokens supposedly tied to real commodities, like crude oil or gold.

The SEC alleges that the DEBT Box defendants engaged in a scheme, that began in March 2021, to sell unregistered securities they call “node licenses.” In hundreds of online videos and social media posts, as well as at investor events, the defendants told investors that the node licenses would generate various crypto asset tokens through crypto mining activity and that revenue-generating businesses in a variety of sectors would drive the value of the various tokens DEBT Box mined, resulting in exorbitant gains for investors. In reality, as alleged, the node licenses were a sham intended to obscure the fact that the total supply of each token was created by DEBT Box instantaneously using code on a blockchain.

TRM’s blockchain intelligence confirms that these tokens were not, in fact, mined.

The SEC also alleged that the operators lied about “the revenues of the businesses purportedly driving the value of the tokens.” This is commonly seen in investment scams, where scam promoters will advertise that a token is backed by a real-world commodity like gold or clean energy projects. DEBT Box also showed other signs of an investment scam, like deliberately misusing blockchain jargon like “nodes” and “mining” to target inexperienced crypto investors.

“We allege that DEBT Box and its principals lied to investors about virtually every material aspect of their unregistered offering of securities, including by falsely stating that they were engaged in crypto asset mining,” said Tracy S. Combs, Director of the SEC’s Salt Lake Regional Office, in a statement. “We filed this emergency action to protect the victims of the defendants’ unlawful actions and stop further harm.”

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