The Securities and Exchange Commission (SEC) today announced it has filed charges against Blox Lending, LLC, its principal Jason R. Anderson, their joint venture partner, Digital Licensing, Inc., and its principals Schad Brannon and Roydon Nelson, in an alleged offering fraud that raised at least $200 million from more than 100,000 retail investors worldwide through an enterprise branded as DEBT Box.

The SEC has filed consents and proposed final judgments as to Brannon, Nelson, and DLI, to settle the action.

The complaint alleges that from November 2021 through August 2023 the defendants engaged in a scheme to defraud investors by offering investment contracts, in the form of license agreements, that gave investors the right to DEBT Box crypto assets that were purportedly associated with real-world projects such as oil, natural gas, agriculture, and other royalty-generating businesses such as beverage distribution and real estate.

According to the complaint, DEBT Box falsely told investors that these real-world projects generated revenue in the form of royalties, and that investors should expect to profit from them because DEBT Box would use that revenue to buy and remove—i.e., “buy and burn”—DEBT Box’s crypto assets from the market, thereby increasing the value of investors’ crypto assets, and provide a way for investors to redeem the value of their investments.

The complaint alleges that, in reality, DEBT Box never received any revenue from real-world projects, and, to hide the absence of revenue, Anderson and Blox instead used over $101 million in investor funds to buy and buy and burn the crypto assets, which had the purpose and effect of Ponzi payments.

The complaint further alleges that Brannon, Nelson, and DLI also used investor funds to invest in or pay third-party real-world businesses, most of which owed no obligations to pay royalites back to DEBT Box.

The SEC’s complaint, filed in federal district court in Salt Lake City, Utah, charges Anderson and Blox with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and charges DLI, Brannon, and Nelson with violating Sections 17(a)(2) and (3) of the Securities Act.

The SEC seeks permanent injunctions and civil penalties against all defendants, disgorgement with prejudgment interest against all defendants except DLI, and conduct-based injunctions against Anderson, Brannon and Nelson.

The SEC also seeks disgorgement with prejudgment interest against relief defendant Business Funding Solutions, LLC, an Anderson company, which received investor funds for no known goods or services.

Without admitting the allegations in the SEC’s complaint, Brannon, Nelson, and DLI each consented to the entry of a final judgment, subject to court approval, in which each agreed to be permanently enjoined from violating Sections 17(a)(2) and (3) of the Securities Act and in which Brannon and Nelson agreed to be enjoined from participating in the issuance, purchase, offer, or sale of any security, except for purchases or sales for their own personal accounts, for a period of two years.

The final judgments, if approved by the court, also would order Nelson to pay disgorgement of $100,025, with prejudgment interest of $12,942, as well a $118,225 civil penalty, Brannon to pay disgorgement of $85,000, with prejudgment of interest of $10,998, as well as a civil penalty of $118,225, and DLI to pay a civil penalty of $591,127.