SEC Battle: LBRY's Fight for Fairness
LBRY is gearing up to contest a recent judgment made by a federal judge in New Hampshire, which favored the Securities and Exchange Commission's (SEC) assertion that the platform's token sales lacked proper registration.
This appeal follows in the footsteps of blockchain company Ripple, which recently achieved a partial victory in its ongoing battle with the nation's federal regulatory authority. Likewise, Grayscale, a prominent asset management firm, secured a noteworthy win, adding to the list of high-profile successes in the crypto industry that have armed other platforms targeted by the SEC with a renewed sense of determination.
LBRY Strikes Back
In a development this week, LBRY, a decentralized content-sharing and publishing platform, lodged an appeal with the United States Court of Appeals for the Second Circuit. Their aim is to challenge the final ruling handed down on July 11, which mandated them to pay a civil penalty and prohibited them from participating in unregistered cryptocurrency asset securities offerings in the future.
In their recent filing, LBRY's management has passionately argued that the SEC's verdict was fundamentally flawed and is actively seeking its reversal.
LBRY has filed a Notice of Appeal against the SEC. pic.twitter.com/Zp9S0TP0Qw— LBRY ???? (@LBRYcom) September 7, 2023
LBRY has been under the SEC's scrutiny since March 2021 when the regulatory body asserted that LBRY Credit token (LBC) fell under the category of securities as defined by the 1933 Securities Act. In November 2022, the New Hampshire District Court instructed LBRY to remit $22 million to the SEC, asserting that LBC indeed qualified as an unregistered security based on its compliance with the Howey test.
LBRY contested this judgment, contending that the $22 million figure was exorbitant and failed to take into account the legitimate expenses associated with the development and hosting of its software. Subsequently, the SEC proposed a reduced penalty of $111,614, acknowledging the financial difficulties of the insolvent company.
In response, LBRY announced its plans to gradually wind down its operations over the upcoming months. However, the recent victories achieved by Ripple and Grayscale in their disputes with the SEC have rekindled optimism regarding the outcome of LBRY's appeal.
Increased Pressure on the SEC?
Many believe that this appeal could establish an encouraging precedent for other alternative cryptocurrencies.
LBRY's decision has also been characterized as an "intriguing maneuver" that could exert additional pressure on the SEC. This comes at a time when the SEC itself is seeking an appeal and a suspension of a July court ruling, in which Judge Analisa Torres determined that XRP largely did not qualify as a security in transactions involving retail investors, a decision with which the SEC was dissatisfied.