Ethereum insider Steven Nerayoff has issued a scathing critique of the US Securities and Exchange Commission (SEC), following a recent controversy involving the regulatory body and crypto firm DEBT Box. Nerayoff’s comments, which are steeped in his personal experiences with the SEC, came after Zaheer Ebtikar of Split Capital brought attention to the SEC’s alleged misconduct.
Ebtikar criticized the SEC for allegedly fabricating dangers to secure a restraining order against crypto firm DEBT Box. In the case, Federal Judge Robert Shelby recently expressed doubts over the SEC’s conduct, suggesting the agency presented false evidence to freeze DEBT Box’s assets.
In July 2023, the SEC accused DEBT Box of offering unregistered securities and defrauding investors of at least $49 million. The SEC’s legal team further alleged that the defendants were trying to move assets and investor funds overseas.
Ethereum Insider Details Rogue SEC Practices
Responding to these developments, Nerayoff lambasted the SEC, detailing his own legal battles with the agency. “Think the SEC’s actions in this case were bad? Allow me to give you a mere glimpse into just some of the illegal acts the SEC committed against me that I uncovered. Most of this is publicly filed in my motion that finally got the case dismissed after 3 1/2 years,” Nerayoff posted on X.
Nerayoff accused the SEC of conducting a prolonged investigation into his activities without any evidence of wrongdoing. “The SEC investigated me for years, often under false pretenses, despite no indication of wrongdoing & found I didn’t do anything wrong,” Nerayoff said.
He alleged that the SEC, in collaboration with the FBI and DOJ, fabricated a crime leading to his prosecution. “The SEC, with FBI & DOJ, fabricated evidence to create a crime that never happened, leading to a malicious prosecution of me for 3 1/2 years.”
Further, he claimed that the SEC overstepped its jurisdiction by leading a criminal prosecution against him. “The SEC is a civil regulatory agency, yet it led a (fabricated) criminal prosecution against me, which is outside of their scope of enforcement,” Nerayoff asserted.
He also highlighted issues with evidence handling, asserting that the SEC withheld critical documents from him. “Documents I requested from the SEC were denied because the DOJ lied in court filings saying the SEC wasn’t part of the prosecution,” he added.
Nerayoff’s frustrations extended to the SEC’s alleged misuse of subpoenas, which he claims were illegally issued on a criminal matter and then concealed.
He also noted the pressure he faced to provide information about other industry leaders:
During my prosecution which was led by the SEC I was under extreme pressure to give information on the leaders of the industry despite having no reason to believe these people committed any crimes. I was forced to risk decades in prison by refusing to cooperate.
In addition, the Ethereum Insider elaborated on another SEC lie in his case. “The SEC admits they have 14 Gigs of data on me despite supposedly not being involved in my case?! Then they say I have to wait at least three years before they will even begin to review my request for those records! Make it make sense?!?!” Nerayoff expressed in disbelief.
Crypto Community Awaits The Next Steps
Nerayoff’s revelations cast a spotlight on the SEC’s practices, especially in its dealings with the cryptocurrency industry. As Bitcoinist has reported in the past few weeks, Nerayoff’s allegations against the SEC, as well as Ethereum co-founders Vitalik Buterin and Joseph Lubin, are quite serious – ranging from bribery to fraud bigger than Sam Bankman-Fried‘s FTX.
Currently, Nerayoff is reportedly working on the fraud allegations against Ethereum founders Vitalik Buterin and Joseph Lubin, following the release of a 2015 recording that includes a conversation between him and Buterin. This recording demonstrated Nerayoff’s significant role in the development of Ethereum.
At press time, ETH traded at $2,207.
Featured image from YouTube / Web Summit, chart from TradingView.com