SEC prosecutors resign following misconduct allegations

Two lawyers at the Securities and Exchange Commission (SEC), Michael Welsh and Joseph Watkins, have resigned from their positions due to allegations of “materially false and misleading representations” made in a cryptocurrency case last year. The lawyers were reportedly asked to leave the agency or be dismissed after their involvement in the lawsuit against Digital Licensing Inc., also known as DEBT Box. Welsh served as the Commission’s primary attorney, while Watkins led the investigative team. In July of last year, DEBT Box and its founders were accused of stealing over $49m from investors, prompting the lawyers to petition Judge Robert Shelby to freeze the company’s assets. However, Shelby later overturned his decision, citing incorrect statements made by Welsh and Watkins. Following the ruling, the SEC apologised for misconduct, while DEBT Box is suing the regulator for damages of $1.5m.