SEC Revises Punishment against LBRY, Reduces Fine by 95%

On May 15, 2023 at 3:49 pm UTC by · 2 mins read

Identifying the platform’s inability to pay a massive sum of $22 million as penalty in violations of the securities laws, the SEC has revised the penalty to $111,000.

In a major development and probably the first, the US Securities and Exchange Commission (SEC) has decided to revise its fine against blockchain-based content-sharing platform LBRY, having identified the platform’s inability to pay a massive sum of $22 million.

As per the filing submitted last week on May 12 in a New Hampshire District Court, the securities regulator sought an amendment to its request for remedies in a case against LBRY. Considering LBRY’s “lack of funds and near-defunct status”, SEC has chosen to withdraw its request for disgorgement, or forfeiture of ill-gotten gains. As per the filing, the securities regulator is now seeking a revised fine of $111,000.

Two years back in March 2021, the US SEC had filed a lawsuit against LBRY while accusing them of offering LBRY Credit tokens (LBC) as unregistered securities and thus violating the federal securities laws. Back then, LBRY CEO Jeremy Kauffman expressed concerns over SEC’s decision stating that this could become a precedence in the long term and will classify almost every cryptocurrency as security.

Despite the fact that LBRY didn’t conduct an initial coin offering (ICO) or any kind of public token sale, the SEC alleged that LBRY’s team used a “pre-mine” process to retain the token to themselves and later released them on secondary exchanges to generate funds for their operations.

The SEC vs LBRY

Through a summary judgment back in November 2022, the SEC secured a win wherein the federal judge ruled that the tokens incentivized LBRY’s team for developing the network while creating the perception among investors that they could secure profits by investing in LBC in the secondary market.

The SEC had argued that LBRY’s possession of the LBC tokens hints at the potential of additional unregistered sales, which supports the necessity of an injunction. “LBRY satisfies the factors for injunctive relief and there is a reasonable likelihood it will violate Section 5 again,” the agency said.

Later in December, LBRY hit back to the SEC’s request of paying $22 million in disgorgement. LBRY stated that “the amount was not a reasonable approximation of profits causally connected to the violation”. In December 2022, LBRY contended that an injunction is unnecessary since they are already in the process of shutting down the operations and burning existing LBC tokens.

Share:

Related Articles

Coinbase Demands SEC to Disclose Full Cost of Crypto Crackdown

By March 3rd, 2025

Coinbase wants to know how many SEC employees worked on crypto cases, their salaries, and how much time they spent on enforcement efforts.

WeekInCrypto: Bitcoin Crashed, SEC Back Off, Experts Stay Bullish

By March 1st, 2025

Despite Bitcoin’s recent volatility, institutional confidence remains strong with Standard Chartered projecting a $500K target. Meanwhile, North Korean hackers executed the largest crypto theft in history and the SEC ended its Uniswap investigation.

SEC Agrees to Drop Lawsuit Against Consensys Over MetaMask Operations

By February 27th, 2025

The SEC has reached a preliminary agreement to end its lawsuit against Consensys, the company behind MetaMask wallet, following accusations that its swap and staking services violated securities laws.

Exit mobile version