Two legal professionals linked to the United States Securities and Exchange Commission (SEC), identified as Michael Welsh and Joseph Watkins, recently faced serious legal repercussions. Accused of dishonest practices during the handling of a cryptocurrency case, both chose to resign after receiving stern warnings of possible dismissal from an SEC supervisor.
Those involved were partners in Digital Licensing Inc., operating under the DEBT Box platform, while simultaneously leading a legal action against it. This overlapping of roles raised significant questions about the integrity of their actions, culminating in public criticism and internal investigations.
The case in question was marked by a series of irregularities, including false statements and the lack of supporting evidence, as pointed out by federal judge Robert Shelby. At a key moment in the process, in March, the conduct of SEC was categorically condemned, leading to a formal apology from the then head of enforcement, Gurbir Grewal.
The controversy intensified in July when the SEC, under Grewal's management, accused DEBT Box and its executives of defrauding investors in excess of $49 million. Although Judge Shelby initially granted the regulator's request to freeze the company's assets, this decision was later reversed. The judge identified that the agency may have issued “materially false and misleading statements” during the process.
Shelby was critical of the evidence and arguments presented by Welsh and Watkins. In one of the sessions, Welsh claimed that DEBT Box had closed its accounts and moved funds overseas, information that proved to be false. An SEC investigator later admitted that internal communications failures contributed to the misunderstanding, prompting Welsh to apologize to the court.
Faced with the admitted errors and the judicial questioning, in December, Grewal took corrective measures, such as appointing new lawyers to the case and implementing a mandatory training program for the inspection team.
