SEC to Close Salt Lake Regional Office in 2024 Amid Failed Crypto Lawsuit Fallout

The US Securities and Exchange Commission (SEC) has announced the closure of its Salt Lake Regional Office in 2024, transferring its responsibilities to the Denver office. This decision follows a federal judge's order requiring the SEC to pay $1.8 million in fees related to the failed DEBT Box crypto lawsuit.

The SEC's Salt Lake Regional Office has faced significant attrition among its staff, including the resignation of two SEC lawyers, Michael Welsh and Joseph Watkins, in April. These departures were linked to the mishandling of the DEBT Box case, where the SEC was accused of engaging in bad faith conduct.

In July 2023, the SEC filed a lawsuit against Digital Licensing, doing business as DEBT Box, alleging an illegal $50 million crypto scheme. However, U.S. Chief District Judge Robert Shelby dismissed the case, citing the SEC's 'gross abuse of power' and ordering the agency to pay $1.8 million in legal fees. Judge Shelby criticized the SEC for making 'materially false and misleading representations' in its bid to freeze DEBT Box's assets.

The closure of the Salt Lake office will result in the transfer of its enforcement jurisdiction to the SEC's Denver Regional Office. All current staff will be reassigned to existing SEC organizational components based on their current functions and agency mission needs. The SEC has assured that this change will not disrupt regulatory oversight for businesses in Utah.

Why this matters: The closure of the SEC's Salt Lake Regional Office has significant implications for the regulation of cryptocurrency firms and the agency's internal management of high-profile cases. This decision may lead to changes in the SEC's enforcement strategies and potentially impact the cryptocurrency industry as a whole.

SEC enforcement chief Gurbir Grewal apologized for the agency's conduct in the DEBT Box case and announced that new attorneys will be appointed to the case with mandated training. The SEC has emphasized that the decision to close the Salt Lake office was based on budget and organizational efficiency considerations.

The SEC's aggressive stance on cryptocurrency regulation has led to numerous legal battles, some of which have ended unfavorably for the agency. The closure of the Salt Lake office raises questions about the SEC's internal challenges in managing high-profile cases involving cryptocurrency firms.

The SEC has stated that it has no plans to close any other regional offices. The agency will continue to pursue enforcement actions against several cryptocurrency firms, including Coinbase, Binance, Kraken, and Ripple.

The closure of the Salt Lake Regional Office marks a significant shift in the SEC's regional presence, reducing its total number of offices from 11 to 10. The decision highlights the challenges the agency faces in balancing enforcement actions with organizational efficiency.

Key Takeaways

• SEC closes Salt Lake Regional Office in 2024 due to budget and efficiency concerns.
• Office faced significant staff attrition, including 2 lawyer resignations, amid DEBT Box crypto lawsuit.
• Federal judge orders SEC to pay $1.8 million in fees for "gross abuse of power" in DEBT Box case.
• Denver Regional Office to assume enforcement jurisdiction from Salt Lake office.
• Closure raises questions about SEC's internal challenges in managing high-profile crypto cases.