A commissioner from the U.S. Securities and Exchange Commission (SEC) has released a statement dissenting against the agency’s enforcement action against the blockchain-based file-sharing payment network LBRY.
In a lengthy statement, SEC Commissioner Hester Peirce says that the SEC’s action against LBRY is “puzzling” as there wasn’t much evidence that the firm committed fraud.
“The Commission has brought many troubling crypto enforcement actions, but the LBRY, Inc. (‘LBRY’) case has especially unsettled me…
This sad reality makes the Commission’s decision to bring a case against LBRY especially puzzling. LBRY’s approach was more conservative than the approach many other projects took. Here, the blockchain was up and running at the time most tokens were sold, and the Commission’s complaint did not allege, and the court did not find, evidence of fraud.”
According to Peirce, the SEC targeted LBRY – which she believes provided a real-world application – rather than pursue other digital asset projects that were obviously partaking in illegal activities. Furthermore, Peirce says that the SEC’s enforcement actions against LBRY were too harsh.
“Why go after a company that sold a token for a functioning blockchain with an established use when we could have pursued plenty of other projects that were outright frauds and did not attempt to comply with the securities laws? To make matters worse, the Commission took an extremely hardline approach in this case.
For example, after winning on summary judgment, the Commission sought monetary remedies of $44 million and asserted that LBRY’s offer to burn all tokens in its possession was not sufficient assurance that LBRY would not violate the registration provisions in the future. The Commission’s requested remedies were entirely out of proportion to any harm.”
The SEC originally filed a lawsuit against LBRY in 2021, alleging that the company sold crypto assets as unregistered securities. In November 2022, a judge ruled in favor of the regulatory agency.
In May, the SEC showed a bit of mercy to LBRY, reducing a $22 million fine to $111,000.
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