In a dramatic turn of events, blockchain-based file-sharing and payment network LBRY is gearing up to challenge the Securities and Exchange Commission (SEC) yet again, after facing a setback in November of the previous year. LBRY, which had hinted at a potential shutdown, has recently filed a notice of appeal opposing a federal court decision from July that backed the SEC.
On September 7th, LBRY approached the United States Court of Appeals for the First Circuit, expressing its intention to contest the final ruling made on July 11, 2023. This ruling demanded LBRY to remit a civil penalty and also restricted the company from any future engagements in unregistered crypto asset securities offerings. The filed document stated, “Defendant LBRY, Inc. now appeals to the United States Court of Appeals for the First Circuit this Court’s final judgment entered on July 11, 2023.”
The initial lawsuit against LBRY by the SEC was instigated in March 2021. The SEC contended that the LBRY Credit token (LBC) was marketed and sold in alignment with the criteria of a security, as outlined in the 1933 Securities Act.Fast forward to November 7, the U.S. District Court for the District of New Hampshire upheld the SEC’s appeal for summary judgment against LBRY.
This verdict prevented LBRY from continuing its “unregistered crypto asset securities” offerings and further mandated a payment of a civil penalty amounting to $111,614 to the SEC.It’s notable that the SEC initially proposed a hefty fine of $22 million. However, the amount was adjusted to a more feasible figure after recognizing the firm’s incapability to meet such an extensive penalty.
Earlier in January, LBRY’s founder and CEO, Jeremy Kauffman, remarked in an interaction with Cointelegraph that the future of LBRY as a corporate entity looked bleak, almost hinting at its end.
The firm seemed to acknowledge the same after the final judgment in July, tweeting:
“In accordance with the court’s order and our promises, we expect to spend the next several months winding LBRY Inc. down entirely.”
Yet, LBRY’s newest action signifies a potential strategic pivot. This change is particularly striking given the context of recent notable wins in the crypto sphere against the SEC, with significant players like Ripple and Grayscale emerging triumphant.
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