The United States Securities and Exchange Commission (SEC) has taken action against Utah-based crypto company Digital Licensing Inc., operating as “DEBT Box,” over alleged fraudulent activities in a $50 million crypto scheme. The SEC obtained a temporary asset freeze, restraining order, and other emergency relief against the company and its four principals, Jason Anderson, Jacob Anderson, Schad Brannon, and Roydon Nelsonand, along with 13 other defendants.
Unregistered Securities: Selling “Node Licenses”
DEBT Box has been accused of selling unregistered securities, termed “node licenses,” since March 2021. The company presented itself as a decentralized eco-friendly blockchain, claiming to sell “software mining licenses” that required activation before mining could begin. These “licenses” were marketed as a gateway to daily rewards from various industries such as real estate, commodities, agriculture, and technology.
(“Mining” projects offered on DEBT Box. Source: thedebtbox.com)
False Promises and Misleading Claims
The SEC complaint states that DEBT Box falsely represented its “nodes” as generators of crypto tokens through mining, and implied that revenue-generating businesses would escalate token values, leading to substantial gains for investors. However, the SEC alleges that the node licenses were a “sham” designed to obscure the fact that the company created the total token supply using blockchain code.
Deceptive Revenue Claims
DEBT Box and its principals are also accused of deceiving investors regarding the revenue of businesses allegedly boosting token values. The SEC argues that these false claims contributed to the illusion of a profitable investment opportunity.
Following the SEC’s enforcement action, DEBT Box’s native token, “DEBT,” experienced a significant drop of 52%, further impacting investors.
The SEC aims to obtain permanent injunctions, recover ill-gotten gains, and impose civil penalties against DEBT Box and its associated individuals.
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
Cointelegraph reached out to Digital Licensing Inc. for comment, but no immediate response was received.
The SEC’s move highlights the importance of regulatory vigilance in the crypto space, underscoring the need for investors to exercise caution and due diligence before participating in such projects.