The US Securities and Exchange Commission (SEC) has recently decided to reduce its initial $22 million penalty against decentralized content platform LBRY to a significantly lower sum of $111,614. This decision has been made in light of LBRY’s “lack of funds and near-defunct status,” according to documents submitted to the New Hampshire District Court by the SEC. It’s clear that the platform isn’t capable of paying the initially proposed fine.
The agency has also requested LBRY to cease any future unregistered offerings of crypto asset securities. The SEC filed a lawsuit against the platform in March 2021, accusing it of conducting an unregistered sale of its token LBRY Credits (LBC), leading to a profit of $22 million. The case resulted in a victory for the regulator in November 2021, with the court ruling that the LBC token is considered a security under US law.
On one hand, the reduced penalty may be seen as a positive development for LBRY, which has faced an uphill battle against the SEC’s allegations since the beginning of the case. Additionally, the platform’s argument that the LBC token is not a security but rather “a digital currency that is an essential component of the LBRY Blockchain” could be considered a valid point.
On the other hand, this reduction of penalty may raise questions about the fairness and consistency of regulatory enforcement within the blockchain industry. Furthermore, the SEC’s initial $22 million claim was considered unreasonable by LBRY. The platform stated that the sum was “vastly” overstated and excluded LBRY’s legitimate business expenses, suggesting that the amount was founded on “rough, back-of-the-envelope math” rather than solid evidence.
The financial consequences of the case have undoubtedly taken a toll on LBRY’s financial health, as the platform has expressed concerns about its ability to survive due to mounting legal and SEC debts. Launched in 2018, the LBRY network aimed to streamline content distribution and access. With a market capitalization of only $6.6 million, the LBC token remains a micro-cap token internationally, as shown in CoinGecko’s data.
At present, the LBC token trades around a mere $0.0102, having reached an all-time high of $1.60 in July 2016. This case has undoubtedly brought forth questions surrounding the industry’s need for clearer regulation and guidance for businesses like LBRY. While the lower penalty amount may provide some relief for the platform, it’s evident that more must be done to address issues that ensure the application of fair and consistent enforcement in the rapidly evolving blockchain and cryptocurrency space.
Source: Cryptonews
