SEC freezes assets of DEBT Box, alleges Utah co. defrauded investors $50 million in crypto asset scheme

The seal of the U.S. Securities and Exchange Commission at SEC headquarters, June 19, 2015, in Washington. | Andrew Harnik, Associated Press

The U.S. Securities and Exchange Commission reports it has obtained a temporary asset freeze, restraining order and other emergency relief against Draper-based Digital Licensing, Inc., doing business as DEBT Box, as well as four company principals and over a dozen other named defendants, alleging they are connected to a cryptocurrency scheme that defrauded hundreds of investors of nearly $50 million.

According to its website, DEBT Box is a “decentralized, eco-friendly, blockchain technology project.”

The SEC’s complaint, unsealed Wednesday in the U.S. District Court for the District of Utah, charges the defendants in an ongoing scheme that began in March 2021 to sell unregistered securities they call “node licenses.” The SEC claims defendants told investors, through online videos, social media posts and investor events, 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.” The SEC says, 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.

“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 press release. “We filed this emergency action to protect the victims of the defendants’ unlawful actions and stop further harm.”

The SEC’s complaint further alleges that DEBT Box and its principals —along with defendants James Franklin, Western Oil Exploration Company Inc., and Ryan Bowen—lied to DEBT Box investors about the revenues of the businesses purportedly driving the value of the tokens.

The SEC reports 18 defendants, including those mentioned above, have been charged with engaging in unregistered securities offerings. DEBT Box, Jason Anderson, Jacob Anderson, Schad Brannon, Roydon Nelson, Franklin, Western Oil, and Bowen were also charged with violations of the antifraud provisions of the federal securities laws. Jason Anderson, Jacob Anderson, Brannon, Nelson, Bowen, Mark Schuler, Benjamin Daniels, Joseph Martinez, Travis Flaherty, Brendon Stangis, Matthew Fritzsche, B & B Investment Group, LLC, and iX Global, LLC were charged with acting as unregistered brokers.

Attempts by the Deseret News to contact DEBT Box for comment on the SEC action through an online email portal on the company’s website were unsuccessful.

The SEC said it is seeking permanent injunctive relief, the return of alleged ill-gotten gains and civil penalties.

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