The United States Securities and Exchange Commission (SEC) has made another move in its attempt to have its case against cryptocurrency mining software firm Digital Licensing, doing business as Debt Box, dismissed. The agency filed a reply to its motion for the court to dismiss the case without prejudice, which would allow the agency to sue Debt Box again. 

The U.S. District Court for Utah Northern Division sanctioned the SEC for “gross abuse of power” and dismissed its first attempt to have the case dismissed without prejudice. It also ordered that Debt Box should receive reimbursement of legal fees. Debt Box asked the court not to dismiss the case without prejudice, calling the move a ploy to avoid permanent dismissal.

The SEC argued that the ability to refile an action was in the interests of Debt Box investors, and precedent showed that the court “normally should grant” a plaintiff’s request for dismissal without prejudice. It stated:

“The SEC seeks dismissal without prejudice to allow the new team of attorneys assigned to the case to analyze the case file and take additional investigative steps before determining whether or not to proceed with a new complaint.”

The SEC’s lead attorneys in the case resigned after the agency was sanctioned by the court.

Related: US senators call SEC actions in Debt Box case ‘unconscionable’

If a dismissal were granted without prejudice, Debt Box sought to impose 11 conditions on the SEC if it refiled a case. The SEC agreed in whole or in part to most of those conditions. One condition was the use of a Wells notice—a warning from the SEC that intends to bring charges—and the completion of investigation files. The SEC sought to limit the material it would provide with the notice.

The SEC opposed a condition requiring it to provide Debt Box with all material it subpoenaed in the case and to have a representative present at non-subpoenaed interviews in the investigation. Finally, it opposed a condition to produce potentially exculpatory information—information that would be favorable to the defendant—from its investigation.

Debt Box is accused of defrauding investors of $50 million and selling unregistered securities in the form of licenses to use their software to mine digital assets.

The SEC temporarily froze the company’s assets in August. This decision led to the agency being sanctioned when the court found that it had used a “false narrative” relating to the company’s purported plans to relocate outside the United States to justify it. The SEC expressed its “deep regrets” over that action.

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