The United States Securities and Exchange Commission (SEC) has taken action to freeze the assets of Utah-based crypto firm Digital Licensing Inc., alleging involvement in a $50 million fraudulent crypto scheme.

The SEC initiated an urgent legal intervention against Digital Licensing Inc., operating under the name “DEBT Box,” as well as its four principals and 13 other defendants. The enforcement action encompassed the firm’s four principals: Jason Anderson, Jacob Anderson (his brother), Schad Brannon, and Roydon Nelson.

This response follows the identification of an alleged fraudulent scheme, involving the sale of unregistered crypto asset securities referred to as “node licenses” to numerous US investors, accumulating an approximate total of $50 million.

Related Reading: FTX’s Dubai Unit Seeks Exclusion From U.S. Liquidation Proceedings

As outlined in the unsealed complaint filed by the SEC in the US District Court for the District of Utah, the ongoing scheme commenced in March 2021.

Defendants Promoted Node Licenses For Token Generation On Social Media

The defendants made claims through hundreds of online videos and social media posts that these node licenses would generate various crypto tokens through mining activities.

DEBT Box also asserts on its website that it operates as a decentralized eco-friendly blockchain, embodying the convergence of crypto and commodities. The platform purports to offer “software mining licenses” for sale, requiring activation prior to the commencement of mining operations.

DEBT Box also promised that revenue-generating businesses across multiple sectors would increase the value of the tokens mined by DEBT Box, resulting in significant profits for investors.

Assurances of daily rewards are tied to a series of “projects,” each seemingly affiliated with different sectors such as real estate, commodities, agriculture, and technology.

However, the SEC’s complaint highlights that the company inaccurately asserted that these “nodes” would generate crypto tokens through mining, and further claimed that revenue-generating businesses would elevate the token values, potentially resulting in significant gains for investors.

With 30,000 followers on Twitter, the firm remained operational until August 3. But the native token, DEBT, affiliated with the company, has experienced a significant decline of over 50% since the SEC took action.

The SEC’s intervention encompasses a temporary asset freeze, a restraining order, and various other emergency relief measures.

Legal Proceedings Filed Against DEBT Box

Aiming at a total of 18 defendants, the complaint accuses them of involvement in unregistered securities offerings. Additionally, DEBT Box and specific individuals within the company are facing charges for violating the anti-fraud provisions of federal securities laws. Some of these individuals are also accused of acting as unregistered brokers.

The defendants are additionally charged with misleading investors regarding the businesses’ revenues, which were influencing the token values.

The SEC is pursuing permanent injunctions, the restitution of acquired gains obtained through unlawful means, and the imposition of civil penalties against the firm. Members of both the Salt Lake Regional Office and SEC Headquarters are overseeing the ongoing investigation by the SEC.