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  • SEC Commissioner Hester Peirce Slams Regulator’s Approach on LRBY Case

    SEC Commissioner Hester Peirce Slams Regulator’s Approach on LRBY Case

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    Hester Peirce of the United States Securities and Exchange Commission has issued a dissenting remark on the regulator’s approach to the crypto sector. In a statement on October 27, the crypto-friendly commissioner lambasted the SEC’s enforcement actions against the LRBY blockchain company. 

    Back in March 2021, the US securities regulator filed a lawsuit against LBRY, claiming the sale of the firm’s LBC token represented an offering of unregistered securities. In November 2022, the US Court finally ruled in favor of the SEC, subjecting LBRY to penalties imposed by the Commission.

    Although LBRY did file an intent to appeal this ruling, it appears the blockchain firm will not be following through with this action, having recently announced plans to wind down its operations due to financial debts to the SEC, a private debtor, and its legal team. 

    SEC Lawsuit Against LBRY ‘Unsettling’, Hester Peirce Says

    Diving into Hester Peirce’s most recent dissent against the SEC, the commissioner claimed to have found the agency’s enforcement action against LBRY “unsettling” and was never in support of the lawsuit against the blockchain firm. 

    Peirce stated the SEC’s decision to file a case against LBRY was quite “puzzling” as there were no “fraud allegations” in the commission’s complaint, nor did any evidence of fraudulent acts by the blockchain firm arise at the time the case was in litigation.

    Rather, the SEC commissioner claimed that LBRY employed a “more conservative” approach than most crypto firms, as the LBRY blockchain only began operations following the sale of most LBC tokens.

    In addition, Peirce also criticized the SEC for initially proposing a penalty of $44 million following its victory over LBRY, a fine that the commissioner claims to be disproportionate to the “alleged crime.” Only following the remedies hearing at the court did the SEC revise its penalty request to $111,614. 

    Peirce Urges SEC To Build Regulatory Framework For Crypto Space

    In the statement on October 27, Peirce also stated there is no defined protocol for blockchain companies like LBRY to register their token offerings with the SEC, as the application of securities law to crypto projects is still unclear. 

    Peradventure if a company was able to even register its token offering, Peirce described such an act as not being a “particularly useful effort.” Rather than launching a lawsuit against LBRY, Peirce claims the SEC could have redeployed its resources into working on a well-defined regulatory framework applicable to crypto projects such as LBRY.

    Peirce said:

    The time and resources we expended on this case could have been devoted to building a workable regulatory framework that companies like LBRY could have followed. Then, the market could have decided LBRY’s fate.

    Total crypto market valued at $1.23 trillion on the hourly chart | Source: TOTAL chart on Tradingview.com

    Featured image from iStock, chart from Tradingview

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    Semilore Faleti

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  • Hester Peirce questions SEC enforcement action against LBRY

    Hester Peirce questions SEC enforcement action against LBRY

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    Hester Peirce has expressed concern over the SEC’s approach towards crypto enforcement, explicitly referencing the recent LBRY case.

    Commissioner Hester Peirce of the Securities and Exchange Commission (SEC) on Oct. 27 shared her thoughts about the agency’s treatment of blockchain-based file sharing and payment network LBRY. 

    In her statement, Peirce highlighted that LBRY had been singled out by the SEC despite it having a functioning blockchain with a real-world application. She decried the Commission’s role in the demise of LBRY following the company’s shutdown after failing to appeal the court decision that went against it.

    “Are investors and the market really better off now after the Commission’s litigation contributed to the demise of a company that had built a functioning blockchain with a real-world application running on top of it?”

    Hester Peirce, SEC Commissioner

    The commissioner said the SEC was misaligned with its “misguided enforcement-driven approach to crypto.” She also condemned the regulator for not having a clear path mapped out for companies like LBRY to be able to register functional token offerings.

    She argued that the SEC could have used the time and resources spent on the LBRY case to create clear regulations that would benefit the crypto sector instead of this blind blame game.

    Columbia Business School professor Austin Campell echoed Commissioner Pearce’s sentiments and described the SEC’s conduct in the LBRY case as “wildly egregious” and a “national scandal.”

    According to him, the SEC had a problem with how LBRY rolled out its native token. The company didn’t register it as a security. The Commission took punitive measures and demanded $44 million in fines, which Campbell felt was odd because there were no allegations or evidence of fraud.

    Eventually, the court approved the fine but reduced it to $111,614. By then, it was too late. The damage was already done, and LBRY went bankrupt soon after.

    Campbell went on to strongly advocate for a complete overhaul of the SEC’s leadership to allow rules more accommodating to innovations like blockchains rather than hindering them with what he considers outdated regulations.


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    Julius Mutunkei

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  • LBRY Shuts Down After Legal Battle With SEC

    LBRY Shuts Down After Legal Battle With SEC

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    LBRY Inc., a cryptocurrency platform, announced its closure due to a court failure against the Securities and Exchange Commission (SEC). The SEC charged LBRY with making an unregistered securities offering by selling its native LBC tokens.

    The fallout from this legal fight has prompted worries about unequal access to justice and regulatory overreach in the crypto business, which has disproportionately impacted smaller startups with minimal financial resources.

    LBRY Inc. reported that the company was compelled to discontinue operations because of obligations owed to the SEC, legal team, and private creditors totaling several million dollars.

    LBRY’s Financial Struggles

    The SEC first sought a $22 million penalties, which was later lowered to $111,614. This lowered fine was a major financial blow for LBRY, making it impossible for the company to continue operations.

    The scenario exemplifies the difficulties that crypto businesses can face when they are pursued by regulatory agencies, particularly smaller startups with minimal financial resources.

    The SEC has been accused of regulatory overreach in pursuing LBRY, with critics suggesting that the agency should focus on big issues in the crypto business rather than minor instances of securities noncompliance.

    However, this case highlights the SEC’s ability to control the cryptocurrency market through enforcement proceedings.

    Ripple’s Contrasting Legal Victory

    The downfall of LBRY contrasts sharply with Ripple’s recent court success in its ongoing struggle with the SEC. Ripple acquired funding from a multibillion-dollar corporation, allowing it to continue its legal battle.

    Crypto total market cap currently at $1.10 trillion. Chart: TradingView.com

    While LBRY Inc.’s controlled operations are ending, the LBRY blockchain, an open-source initiative, may continue to exist if sufficient user engagement is obtained. However, the business stated that decentralization may only succeed if active development and user participation are present.

    With millions of registered users and a large volume of published material, the LBRY blockchain acted as a decentralized file-sharing network. Odysee, a decentralized social networking platform built on the LBRY blockchain, has a substantial user base. However, its future is now in doubt.

    In a broader sense, the legal disputes in the crypto business are altering the securities law landscape. Both LBRY and Ripple have been accused with selling unregistered securities, but their outcomes have set developing precedents.

    These results have prompted concerns about the SEC’s capacity to win legal battles against other crypto businesses.

    As LBRY succumbs to regulatory pressure, it represents the obstacles encountered by smaller crypto businesses, as well as the broader issue of unequal access to justice in the cryptocurrency industry’s growing regulatory context.

    Featured image from Conseils Crypto

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    Yuna Rin

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  • Pro-XRP Lawyer Deaton Blasts SEC For Millions Wasted

    Pro-XRP Lawyer Deaton Blasts SEC For Millions Wasted

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    Prominent pro-XRP lawyer John Deaton has launched a scathing critique of the US Securities and Exchange Commission (SEC) in light of the regulatory body’s actions against blockchain company LBRY Inc. Deaton, renowned for representing XRP holders in the Ripple-SEC lawsuit, marked the regulatory body’s conduct as an exhibit of overreach.

    “The LBRY case should be taught in law schools across the country,” Deaton asserted on X (formerly Twitter), emphasizing its significance not just in applying “the Howey Test to modern-day blockchain technologies and crypto,” but also as a “specific highlight [of] SEC overreach.”

    Pro-XRP Lawyer Deaton Slams SEC

    Elaborating further on his stance, Deaton criticized the SEC’s choice to pursue LBRY Inc., a relatively smaller entity, despite there being larger, more questionable activities to scrutinize within the crypto sector. He remarked that the regulatory body “picked a small American Company based out of New Hampshire, threatened to bankrupt it during the investigation, and then proceeded to bankrupt it – in a case where no fraud or misrepresentation occurred.”

    Meanwhile, the US Securities and Exchange Commission (SEC) has seemingly turned a blind eye to the real scammers in the crypto ecosystem. Deaton cites “FTX, Celsius Network, Voyager, Luna, Genesis, [other] pump and dumps” as potential targets for the US agency that it could have investigated and stopped to protect US retail investors. Instead, all of these companies caused a massive amount of damage.

    Deaton’s tweet came in response to an announcement by LBRY Inc. Marked by a tone of resignation, they unveiled their decision to cease operations amidst unsustainable debts and continuous challenges posed by the SEC. The firm was initially slapped with a $22 million fine, which was later mitigated to $111,000 by the SEC, in cognizance of LBRY’s financial duress.

    Following this, the company withdrew its appeal against the SEC and commenced its wind-down procedures, with all executives, employees, and board members tendering their resignations.

    Commenting on the LBRY case’s broader implications, Deaton highlighted the expenditure of “millions of dollars” resulting in a $130,000 fine, painting a picture of inefficiency and failure on the part of the SEC.

    His condemnation didn’t just pertain to the financial aspects but extended towards the regulatory approach and discernment exercised by the SEC in choosing its battles within the crypto landscape:

    After millions of dollars were wasted, the SEC got a $130K fine. This case alone proves the SEC is a broken, failed and inept agency.

    Remarkably, the conclusion of LBRY’s journey has elicited a mixture of disappointment and resilience from the crypto community. Despite the unfolding adversities, community members have conveyed their willingness to sustain LBRY’s open-source blockchain network, Odysee, showcasing the persistent spirit of the decentralized ethos.

    At press time, XRP was trading at $ and eyed a daily above the 200-day EMA ($0.5172)

    XRP price sits just below the 200D EMA, 1-day chart | Source: XRPUSD on TradingView.com

    Featured image from Crypto Economy, chart from TradingView.com

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    Jake Simmons

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