The United States Securities and Exchange Commission (SEC) has recently submitted an amendment to its request for remedies in its case against decentralized content platform LBRY. Previously, the SEC sought a $22 million penalty – the amount it claims LBRY gained from the sale of its token LBRY Credits (LBC). However, in light of LBRY’s financial troubles and near-defunct status, the SEC is now asking the court to impose a reduced fine of $111,614.
This recent request by the SEC also aims to prohibit LBRY from conducting future unregistered offerings of crypto asset securities. According to the regulatory body, the smaller penalty is a compromise that balances the deterrence from a penalty with LBRY’s inability to pay.
The SEC first filed a civil suit against LBRY in March 2021, alleging the firm’s LBC sales were unregistered securities offerings. The regulatory body called for $22 million in disgorgement and demanded the court to order LBRY to halt any further LBC sales. The SEC emerged victorious in the case in November 2022, when the presiding judge ruled that LBC was indeed a security.
This reduced fine, however, has some questioning whether it truly helps the world, particularly when considering the millions of dollars spent on the case, and LBRY’s financial ruin.
In response to the SEC’s initial request for $22 million, LBRY argued that the sum was unreasonable, overstated, and did not take into account any of its legitimate business expenses. The company claimed the SEC’s calculation was based on rough estimations, and the amount sought was not supported by the record.
In December 2022, shortly after the SEC’s victory the month prior, LBRY announced it would likely be dead in the near future, attributing its impending demise to legal and SEC debts.
While the SEC’s reduced fine may be seen as a more reasonable outcome for LBRY, the case highlights the challenges faced by companies dealing with securities regulations in the world of crypto-assets. Crypto enthusiasts wonder if SEC Chair Gary Gensler has the final say when it comes to crypto regulations or if alternate approaches to regulation could be more beneficial for the industry as a whole.
The LBRY case demonstrates the need for clarity and collaboration between regulators and companies in the rapidly evolving cryptocurrency and blockchain space. As the industry matures, finding a balance between regulatory oversight that ensures safety and security, while not stifling innovation, will be an ongoing challenge.
Source: Cointelegraph
