The U.S. Securities and Exchange Commission (SEC) is seeking to revise its punishment against LBRY, a decentralized content platform. The SEC acknowledges that LBRY is unlikely to be able to pay the original $22 million fine and is now requesting a fine of $111,614. This change is based on LBRY’s “lack of funds and near-defunct status,” as stated in the SEC’s filing on May 12th.
The SEC’s decision to revise the punishment reflects LBRY’s representation that it is defunct and ceasing operations, with limited funds to pay a larger fine. The ability to pay is a factor considered when imposing a civil penalty, as stated by the SEC. The revised fine of $111,614 takes into account LBRY’s financial situation.
LBRY gained attention for its sale of LBRY Credits (LBC), and the SEC initially sought the $22 million amount, representing the alleged gains from the token sale. However, given LBRY’s circumstances, the SEC has adjusted its request to a significantly lower fine.
LBRY’s case highlights the importance of regulatory compliance in the cryptocurrency industry and the SEC’s role in enforcing securities laws. The outcome of this revised punishment will further shape the legal landscape for decentralized content platforms and their token offerings.
The SEC first filed a civil suit against LBRY in March 2021, alleging that the firm’s LBC sales were unregistered securities offerings. It asked for $22 million in disgorgement and for the court to order LBRY to halt any further LBC sales.
The SEC won the case in November 2022, while the preceding Judge also ruling that LBC was a security.
In a December filing, LBRY claimed the SEC’s request for $22 million wasn’t reasonable, as it was “vastly” overstated and failed to “deduct any of LBRY’s legitimate business expenses.”