SEC Obtains Asset Freeze in Connection With Alleged $50 Million Crypto Asset Scam

The Securities and Exchange Commission (SEC) today announced charges against Digital Licensing Inc, doing business as “DEBT Box”, and its four principals, Jason Anderson, his brother Jacob Anderson, Schad Brannon, and Roydon Nelson, for engaging in an alleged fraudulent scheme to sell crypto asset securities to hundreds of U.S. investors. The scheme raised approximately $50 million and an unspecified amount of Bitcoin and Ether. According to the SEC's complaint, the defendants sold so-called "node licenses" to investors, claiming that they would generate various crypto asset tokens through crypto mining activity and that revenue-generating businesses in various sectors would drive up the value of such tokens, resulting in high returns for the investors. In reality, the node licenses were a sham and the total supply of each token was created by DEBT Box instantaneously using code on a blockchain.In addition to selling the unregistered securities, the defendants were also charged with lying to investors about the business revenues supposedly driving the cryptocurrency values, as well as operating without registering as brokers. In total, 18 defendants were charged with unregistered securities offerings, and nine other defendants were charged with antifraud and unregistered broker violations. To protect investors from further harm, the SEC obtained a temporary asset freeze, restraining order, and other emergency relief. The SEC is conducting a continuing investigation into this matter and has urged investors to exercise caution when considering crypto asset investments. The SEC has also provided a list of 10 red flags that may indicate an unregistered offering may be a scam.