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Utah Crypto Scammers Lied to Investors About ‘Virtually Everything,’ Claims SEC

2 mins
Updated by Michael Washburn
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In Brief

  • The SEC has come down on Digital Licensing Inc. (DEBT Box) for alleged crypto fraud, obtaining an asset freeze and restraining order.
  • DEBT Box and its principals, along with 13 other defendants, are accused of selling unregistered securities as "node licenses" to investors.
  • The company allegedly lied about "virtually every material aspect" of its securites offerings and did not have proper registrations in place.
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The Securities and Exchange Commission (SEC) has taken action against Digital Licensing Inc., also known as “DEBT Box,” for an alleged crypto fraud scheme.

The SEC obtained a temporary asset freeze, restraining order, and other emergency relief in response to an elaborate fraudulent scheme that involved selling crypto asset securities to hundreds of investors. The company reportedly raised about $50 million and undisclosed amounts of Bitcoin (BTC) and Ether (ETH), according to an SEC statement.

The Regulator Charges 18 Individuals

The agency explicitly named the company’s four principals in the action, Jason Anderson, Jacob Anderson, Schad Brannon, and Roydon Nelson. A total of 13 other unnamed defendants are also included. Overall, 18 defendants have been charged with offering unregistered securities.

Learn how to keep your digital assets safe with this helpful guide: 15 Most Common Crypto Scams To Look Out For

The SEC filed an unsealed complaint in the US District Court for the District of Utah, accusing the defendants of conducting the scheme since March 2021. According to the SEC statement, the group marketed unregistered securities as “node licenses” through online videos, social media, and investor events. 

The accused allegedly claimed the licenses would generate valuable crypto asset tokens through mining. However, The SEC alleges that this was all a deceit.

In fact, DEBT Box had apparently created the tokens’ total supply in an instant. The “mining” of these crypto assets was a complete fabrication.

DEBT Box Lied About “About Virtually Every Material Aspect”

The complaint claims that DEBT Box and its team misled investors by providing false information about business revenues. This deception was allegedly to increase the value of the tokens.

“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…. We filed this emergency action to protect the victims of the defendants’ unlawful actions and stop further harm,” said Tracy S. Combs, director of the SEC’s Salt Lake Regional Office.

According to the release, the SEC continues to investigate the matter. There is still room for additional charges.

The SEC has been highly vigilant when it comes to securities fraud in recent years. Especially when the alleged securities fall under the umbrella of crypto.

But that doesn’t mean the regulator always gets it right. On July 13, a judge ruled that—contrary to the SEC’s claims—Ripple’s cryptocurrency XRP was not a security when sold to retail investors on exchanges.

The win for Ripple provoked celebration across the industry, as many wondered whether it would bode well for other cases.

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Josh Adams
Josh is a reporter at BeInCrypto. He first worked as a journalist over a decade ago, initially covering music before moving into politics and current affairs. Josh first owned Bitcoin in 2014 and has followed the space ever since. He is particularly interested in Web3 adoption, policy and regulation, CBDCs, privacy, and the future of the metaverse.