Blox Lending and DEBT Box: SEC Alleges $200 Million Crypto Offering Fraud, Filed October 28, 2026

What the complaint says Blox Lending is

The complaint describes Blox Lending, LLC as a Nevada limited liability company formed on August 14, 2020 and headquartered in Draper, Utah. Its owner is its sole member and manager, and the complaint says Blox “claims to be in the real estate and real estate lending business” and has no employees. Five Blox bank accounts that received investor money had one signatory; a sixth account received “a few deposits of investor funds from a promoter.”

That description does not match everything the SEC has said before. In the 2023 complaint the SEC called Blox “a Utah limited liability company” and listed it as a relief defendant that “received at least $4,700,000” of investor funds. We did not look up either state’s business registry, so we cannot say which description is current.

The other company is Digital Licensing, Inc. (DLI), a Wyoming corporation formed on March 18, 2021 with its principal place of business in Utah. Its two principals own 50% each and were the only signatories on its bank accounts. The two companies ran DEBT Box as a joint venture under an August 1, 2021 memorandum of understanding: Blox owned the software, websites, wallets and license agreements, and DLI had the right to sell the license agreements. A third company, Business Funding Solutions, LLC, is named as a “relief defendant,” which means the SEC does not accuse it of fraud but says it received investor money it has no right to keep. The complaint says it received at least $15,197,761.

How DEBT Box worked, per the complaint

An investor bought a “license agreement” (the offering materials called it a “software mining license” or “node license”) for a few hundred to a few thousand dollars, paying by wire to DLI, in crypto to a payments wallet, or through a promoter. The agreement gave the right to receive crypto tokens tied to a named “real-world project,” such as oil (BGLD), natural gas (NATG), aluminum (ALUM), water (DRIP) or real estate (BLOX). The complaint says license holders did not run a blockchain node, validate anything or perform any service: the tokens were created by a smart contract the developer wrote, and distributed every 24 hours by an algorithm whose formula was not public.

The pitch for why a token should rise was “buy and burn.” DEBT Box told investors that the real-world projects paid royalties into a trust, which used them to buy the project’s token on the open market and send it to a burn wallet, shrinking supply. The complaint says that is the only external source of value the Lite Papers (the offering documents) identified for each token. Selling was a two-step path: first swap the project token for the DEBT token, then swap DEBT for a mainstream crypto asset in a liquidity pool. The complaint says the Blox side created those pools and supplied over 99% of the liquidity in three of them, and that license agreements themselves could not be sold or transferred.

Where the money went

The complaint’s paragraph 17 splits the $161 million. We added percentages (our arithmetic).

Two other figures frame the table. The complaint says that of the $200 million in license sales, less than $15 million was deployed to real-world project businesses, “most of which” owed no obligation to pay royalties. And it says the $161 million came in through two channels: DLI’s bank accounts took just under $26 million, while Blox and its owner controlled about $147 million (about $15.2 million to Business Funding’s accounts, about $3.3 million to Blox’s accounts and about $129 million in crypto assets). Our arithmetic: $147 million plus the $14 million left at DLI after its $12 million transfer comes to $161 million.

For the DLI side, the complaint lists three payments of investor funds to companies the DLI principals owned or part-owned: $1,625,189 to an oil and gas drilling company between September 2022 and June 2023, $496,000 to an energy company between February and May 2023, and $4,068,494.93 to The Gold Collective, LLC between November 2021 and May 2023. It says none of them owed DEBT Box royalties. Our arithmetic: the three payments add up to $6,189,683.93.

The real estate token: BLOX

Real estate is the reason this page sits on a real estate investing site, and it is a narrow part of the case. The complaint lists eleven project tokens. Ten were tied to oil, gold, cannabis, natural gas, exploration technology, aluminum, beverages, water, data center mining and vehicles. One, BLOX, was tied to “Real Estate,” and the complaint says it was first offered for sale in January 2023.

The BLOX Lite Paper, which the complaint says was given to investors from at least January 2023, said the token’s value was “supported by five areas,” and that “Blockchain Real Estate (BLOX) project royalties will purchase token out of the ecosystem and burn them.” The complaint says real estate royalties were the only asset outside the DEBT Box system that could create profits for BLOX holders, and alleges that “DEBT Box never used any real estate royalties to buy and burn BLOX.” Real estate appears in the complaint as the BLOX royalty claim, as one item in generic lists of commodities in the Lite Papers, and in Blox’s own description of its business. We read no real estate property or loan described anywhere in the 92 pages.

This is a different risk from the ones in our guide to tokenized real estate on EDGAR, where a token holder’s legal claim sits in a filed offering document. Here the SEC alleges the royalties never existed. The Texas cease-and-desist order on another tokenized real estate offering is a state-level example, and our real estate crowdfunding red flags page covers the checks that apply before money goes in.

The money that bought tokens (our arithmetic)

The complaint’s theory is that the buy-and-burn story was a cover. It says Blox’s owner bought tokens “on a nearly daily basis,” using investor money instead of royalties, and quotes a June 16, 2023 message from one of the individual defendants about the budget: token support was “around $200k a day in token support right now or 6m a month,” while “Sales are around 3.5m a month.” Our arithmetic: $6 million of monthly token buying against $3.5 million of monthly sales is 1.7 times sales. The same message, as quoted, says “100% of full license sales need to go to token support.” We quote only the part we can attribute to the complaint; we cannot see the full message thread.

The complaint also alleges price management. DEBT, the token that every project token had to be swapped into before cashing out, traded at $21.28 on January 4, 2023 and $31.35 on January 12, 2023 (up 47.3%, our arithmetic) after Blox-side wallets bought nearly $6.9 million of DEBT in that window, 66% of all purchases by value. On January 13, 2023, the day before a large investor conference, the complaint says they removed about $1.8 million of liquidity, 25% of the pool, which makes later buying move the price further. In the week of January 21 to 27, 2023 DEBT fell about 40%, from about $38 to about $23.

A third allegation is that the “fair launch” claim was false. The Lite Papers said 100% of the token “must be mined,” but the complaint says one Blox wallet received 12,502,790.77 of the 13,749,891 DEBT tokens available on March 14, 2022 (90.9%, our arithmetic) and by August 16, 2023 about 91.65% of all DEBT distributed had gone to three wallets controlled by the Blox side.

Who settled, who did not

Under the release, DLI and its two principals filed consents and proposed final judgments, “without admitting the allegations,” subject to court approval. Each is to be permanently enjoined from violating Securities Act Sections 17(a)(2) and (3), and the two individuals from taking part in offering, buying or selling any security (other than for their own accounts) for two years. Amounts, as the release states them:

Our arithmetic: the two individuals’ disgorgement of $185,025 is 1.3% of the roughly $14 million the complaint says ended up with DLI and its principals, and the whole $1,036,542 is 0.64% of the $161 million. We have not read the consents or the proposed judgments, and the release does not say how any money collected would be distributed.

The case against Blox and its owner is litigated. The SEC seeks permanent injunctions, civil penalties and disgorgement with interest from them, a conduct-based injunction against the owner on taking part in any securities offering (other than for his own accounts), and disgorgement from Business Funding Solutions.

The first case, 2023 to 2024

Anyone who read about DEBT Box in 2023 or 2024 is looking at a different case. On July 26, 2023 the SEC sued in the same court (No. 2:23-cv-00482) alleging a fraudulent offering of “node software licenses” that had defrauded “thousands of investors of at least $49 million,” and obtained an asset freeze and a receiver. The court’s May 28, 2024 order, our only source for what happened next, records that the freeze and receivership were dissolved on October 6, 2023, and that on March 18, 2024 the court found “the Commission engaged in bad faith conduct in obtaining and defending the TRO” and sanctioned the SEC by making it pay the fees and costs from that emergency relief. The May 28, 2024 order set eight awards, ranging from $8,239.25 to $746,941.86 (the receiver); they add up to $1,821,824.11 (our arithmetic).

The 2026 complaint says it was filed in Utah in line with a court order, citing the May 28, 2024 dismissal of the 2023 case without prejudice. The new complaint also puts the amount received at $161 million, against “at least $49 million” of investor losses alleged in 2023 (3.3 times, our arithmetic, although the two figures measure different things). We did not read the 2024 dismissal order itself, only the order on fees and the 2026 complaint’s description of it.

What is not known

• A ruling. We read no answer from the defendants who did not settle, no hearing date and no court approval of the proposed settlements. We did not open the docket on PACER.
• Any claims process. Neither the release nor the complaint mentions a receiver, an asset freeze or a fund to return money to investors in the 2026 case. The 2023 receivership was dissolved, per the 2024 order. A return of money in an SEC case, if there is one, is usually set up after a judgment, and we found nothing yet.
• What your tokens are worth. The complaint describes prices through August 2023. We do not report current prices or whether any DEBT Box token still trades.
• Which side of the fraud your money was on. The complaint covers purchases through early August 2023 and states that investors paid through three channels (wires to DLI, crypto to payments wallets, and promoters). Your own receipts show which.
• Whether Blox made any real estate loans. The complaint says it “claims” to be in real estate lending and does not describe any.

What a reader can do with this

1. Work out what you hold. The complaint separates the license agreement (which could not be sold or transferred) from the tokens it entitled you to, and from the DEBT token used to cash out. Write down which project tokens you received, the dates, the amounts you paid and how you paid: wire to DLI, crypto to a payments wallet, or through a promoter.
2. Keep the records. Emails, dashboard screenshots, wallet addresses and transaction hashes, wire confirmations and the promoter’s name are the evidence that could support a claim. The complaint says investors in at least 15 states and overseas bought license agreements.
3. Read the part of the complaint on your token. Sections III.B and III.C of the complaint take BGLD first and then NATG, ALUM, XPLR, GROW, BEV, BLOX, DRIP, DCM and REV one by one, each quoting the Lite Paper and stating what the SEC says was false. The complaint is free on the SEC’s litigation release page.
4. Report, and watch the docket. The SEC takes tips from investors at sec.gov/tcr, and your state securities regulator takes complaints too. The case number to follow is No. 2:26-cv-01066 in the District of Utah; approval of the three proposed judgments will show there.
5. Expect “recovery” offers. After a case like this, people may contact holders offering to recover the money for a fee. Nothing in the SEC release or complaint refers to such an arrangement. Check any such offer against the court docket before paying.
6. Treat a loss as a tax question, not a headline. Whether and when a crypto loss can be deducted depends on facts we do not have, and the rules differ from the stock rules in our other pages.

FAQ

This is analysis of public documents, not investment, legal or tax advice. All figures come from documents read on November 4, 2026: the SEC’s complaint in No. 2:26-cv-01066 (D. Utah, Document 1, filed October 28, 2026), SEC Litigation Release No. 26678 (October 29, 2026), the SEC’s complaint in No. 2:23-cv-00482 (D. Utah, Document 1, filed July 26, 2023) and the court’s Memorandum Decision and Order of May 28, 2024 (Document 312) in that case. The court docket was not read. Allegations in a complaint are not findings of fact.