Crypto “brokers” in Utah “showered” cash from $50 million scam, SEC claims

According to the US Securities and Exchange Commission, executives at a Utah company that sold multimillion-dollar cryptocurrency assets lied to hundreds of investors about their actions and pocketed the fraudulent profits.

Digital Licensing, Inc. presents itself as a DEBT box online and is reinforced by defendants in hundreds of videos and social media posts, according to the SEC. Company posts describe DEBT as “decentralized, green blockchain technology” and “where crypto meets commodities.”

DEBT Box claims online to be an alternative to cryptocurrencies like Bitcoin or Ethereum, offering software “node licenses” that enable cloud mining that uses less energy. It also claims that its projects are “backed by royalties from real-world industries and the production/sale of raw materials.”

A company post on Medium cites this example: “DEBT’s partnerships with oil exploration and production companies enable lower exploration costs, improved efficiencies and more, resulting in higher revenues.” A percentage of these revenues are “converted” into the black-gold token. , it was said.

But none of the firm’s chief executives — brothers Jason and Jacob Anderson, Schad Brannon and Roydon Nelson — are registered crypto brokers, the SEC complaint says, and the “‘real projects’ and ‘real assets'” [they] It is a sham to underpin the value of these tokens.”

“And instead of using investor funds generated from the sale of the Node software licenses to support the underlying companies,” the SEC alleges, “defendants have appropriated the funds for their own personal gain — to buy luxury vehicles and homes, luxurious ones.” vacations, etc.” showering themselves and their friends with cash.”

The agency obtained an injunction and asset freeze against Digital Licensing, Inc., which it says is incorporated in Wyoming but operates out of Draper. The injunction temporarily halts all business operations and freezes the assets of 18 defendants.

The frozen assets include properties in Utah, California and Wyoming and nearly 40 cars. Personal assets include a 2017 Ferrari with the make-up tag “3RDW1FE” and a 2021 Lamborghini with the license plate “FUNDING,” according to the injunction.

US District Court Chief Justice Robert J. Shelly granted the order on July 28. Attorneys for the defendants are not currently listed in federal court filings, and the Salt Lake Tribune was unable to immediately seek comment from company officials.

In a lawsuit unsealed Wednesday, the SEC alleges that the 18 defendants — the company, its four directors, and 13 other individuals and companies — offered unregistered crypto-asset securities to hundreds of investors, raising $50 million. They also sold unspecified amounts of bitcoin and ether, two forms of cryptocurrency, the agency claims.

The defendants did not mine crypto, as they claimed, but instead instantly created each token using code on a blockchain, a shared database commonly used to track cryptocurrency transactions, according to the SEC.

The SEC alleges that the company, its principals and some of the other defendants also lied to DEBT box investors about the business earnings, which they claimed affected the value of the cryptocurrency they were selling. “The companies simply did not have and do not have the capabilities or revenue that defendants have consistently presented to investors,” the lawsuit states.

The SEC requires return of all “illegitimate winnings” and civil penalties. The court has appointed an attorney and law firm, Josias N. Dewey of Holland & Night LLP, as the company’s “interim liquidator.” Dewey controls the company and has the power to “book” and recover all of the company’s assets.

“We allege that DEBT Box and its principals lied to investors about virtually every material aspect of their unregistered securities offering, including falsely claiming they were involved in crypto asset mining,” said SEC Director Tracy S. Combs in the Salt Lake Regional Office, in a statement.

“We have filed this emergency action to protect the victims of the defendants’ wrongful actions and to prevent further harm,” Combs said.

Brothers Jason R. Anderson, 43, and Jacob S. Anderson, 40, are Utah residents and have identified to investors as co-founders and co-owners of DEBT Box, the SEC said.

Brannon, 50, is from California and is currently DEBT Box’s president, and Nelson, also 50, from St. George, is a director, treasurer and secretary, it said.

She and Utahns Ryan Bowen, 46; Mark Williams Schuler, 45; Benjamin Frank Daniels, 48; Joseph Anthony Martinez, 36; Matthew Dillon Fritzsche, 30; along with Utah firms B&B Investment Group and iX Global, as well as other state defendants, are accused of acting as unregistered brokers.

Recently, the “fraudulent unregistered securities offering” increased, according to the SEC, with the announcement of two new types of software licenses and a spin-off offering, the FAIR project.

“Over the past two months, certain defendants have taken steps to evade prosecution,” the SEC added in its complaint. “DEBT Box has stated that it is in the process of relocating its operations to the United Arab Emirates, specifically to avoid federal securities laws.”

In a June YouTube video, Jacob Anderson announced, “We’ve all moved.” [DEBT Box’s] Operations to Abu Dhabi” and claimed that DEBT Box is “under the judicial control of Abu Dhabi and not the SEC”.

On June 26, 2023, iX Global — a multi-level marketing firm that promoted DEBT box software licenses — began closing its American bank accounts, the SEC said, and has since withdrawn over $720,000 in investor funds from them .

Shannon Sollitt is one Report for America Corps member dedicated to business responsibility and sustainability for The Salt Lake Tribune. Her donation to complement our RFA grant helps ensure she continues to write stories like this. Please consider making a tax-deductible gift of any amount today by clicking Here.

Justin Scaccy

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