The Securities & Exchange Commission today announced that it obtained a temporary asset freeze, restraining order, & other emergency relief against Digital Licensing Inc., a Draper, Utah based entity doing business as “DEBT Box,” as well as the company’s four principals, Jason Anderson, his brother Jacob Anderson, Schad Brannon, & Roydon Nelson, & 13 other defendants in connection with a fraudulent scheme to sell crypto asset securities to hundreds of U.S. investors that raised approximately $50 million & unspecified amounts of Bitcoin & Ether.
The SEC’s complaint, unsealed yesterday in the U.S. District Court for the District of Utah, charges the defendants in an ongoing scheme that began in March 2021 to sell unregistered securities they call “node licenses.” In hundreds of online videos & social media posts, as well as at investor events, the defendants told investors that the node licenses would generate various crypto asset tokens through crypto mining activity & that revenue-generating businesses in a variety of sectors would drive the value of the various tokens DEBT Box mined, resulting in exorbitant gains for investors. In reality, as alleged, the node licenses were a sham intended to obscure the fact that the total supply of each token was created by DEBT Box instantaneously using code on a blockchain.
“We allege that DEBT Box & 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,” said Tracy S. Combs, Director of the SEC’s Salt Lake Regional Office. “We filed this emergency action to protect the victims of the defendants’ unlawful actions & stop further harm.”
The SEC’s complaint further alleges that DEBT Box & its principals —along with defendants James Franklin, Western Oil Exploration Company Inc., & Ryan Bowen—lied to DEBT Box investors about the revenues of the businesses purportedly driving the value of the tokens.
In total, 18 defendants, including those mentioned above, have been charged with engaging in unregistered securities offerings. DEBT Box, Jason Anderson, Jacob Anderson, Brannon, Nelson, Franklin, Western Oil, & Bowen were also charged with violations of the antifraud provisions of the federal securities laws. Jason Anderson, Jacob Anderson, Brannon, Nelson, Bowen, Mark Schuler, Benjamin Daniels, Joseph Martinez, Travis Flaherty, Brendon Stangis, Matthew Fritzsche, B & B Investment Group, LLC, & iX Global, LLC were charged with acting as unregistered brokers.
The complaint seeks permanent injunctive relief, the return of alleged ill-gotten gains, & civil penalties. The Honorable Judge Robert J. Shelby, U.S. District Judge for the District of Utah, entered an order on July 28, 2023, imposing a temporary restraining order, asset freeze, & other relief. Judge Shelby also entered an order appointing Josias N. Dewey of the law firm Holland & Knight LLP as a temporary receiver over DEBT Box to, amongst other things, marshal assets for the benefit of investors. Investors who believe they were affected by the DEBT Box offering may visit the receiver’s website at www.debtboxreceiver.com or call (305) 349-2134.
The SEC’s continuing investigation is being conducted by Joseph Watkins, Laurie Abbott, & Mitchell Davidson of the Salt Lake Regional Office & Karaz Zaki of SEC Headquarters. The litigation will be led by Casey Fronk & Michael Welsh. The matter is being supervised by Ms. Combs.
Investors can learn more about the risks of investing in crypto asset securities & unregistered offerings by reading SEC investor education bulletins such as Exercise Caution with Crypto Asset Securities & 10 Red Flags That An Unregistered Offering May Be A Scam.