SEC lawyers resign following controversial DEBT Box case

Two SEC lawyers have resigned following controversies in the regulator’s legal case against crypto firm DEBT Box.

Bloomberg reported on April 22 that Michael Welsh and Joseph Watkins, who served as lead SEC attorneys in the ongoing case, resigned in April. The regulator reportedly intended to terminate both lawyers if they did not resign.

Bloomberg said neither Welsh nor Watkins responded to its request for comments. The SEC and a union representative also declined to comment.

Neither individual has updated their LinkedIn page to include the resignation. The two had been serving as SEC trial lawyers for approximately 18 months.

DEBT Box Case

Welsh and Watkins’ handling of the DEBT Box case produced massive controversy due to inaccuracies in the information they presented in court to successfully obtain a temporary restraining order and asset freeze against the company.

Later proceedings found SEC counsel had made false and misleading statements to justify the request, including wrongfully suggesting Debt BOX had closed accounts 48 hours before a hearing.

The SEC admitted to errors in December 2023 and attempted to drop the case in January. Debt BOX later challenged the attempted dismissal.

Judge Robert Shelby sanctioned the SEC for abuse of power in March and compelled the agency to pay legal fees in the case.

Further departures unlikely

Each lawyer’s resignation is noteworthy due to a separate, seemingly unfounded rumor that SEC chair Gary Gensler intends to resign.

FOX Business reporter Eleanor Terret dispelled the rumor. She said Gensler could lose his position as SEC chair with the upcoming US elections but will probably not voluntarily resign because he likes the position.

She added the White House would likely forbid Gensler from resigning due to the difficulty of nominating a replacement at present.

Terret added that SEC commissioner Caroline Crenshaw’s term is set to end in June, and no information indicates that her position will be renewed. However, the SEC has not commented on the matter.

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