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- The comments come after LBRY Inc. announced its decision to cease operations.
- Peirce stated that there is no clear path for companies like LBRY to register their functional token offering.
In a candid and critical statement, Hester Peirce, commissioner at the US Securities and Exchange Commission (SEC), expressed her dissatisfaction with the way the SEC handled the charges against crypto startup LBRY.
Peirce, known for her crypto-friendly stance, marked that despite the SEC’s claims of clarity in applying securities laws to token projects, the reality is quite the opposite.
LBRY, which was charged by the SEC with selling unregistered securities, recently announced its closure, further highlighting the difficulties that token projects face in dealing with regulatory challenges.
Commissioner Hester Peirce spoke about the SEC’s actions and expressed her concerns, stating that there is no clear path for companies like LBRY to register their functional token offerings.
She noted that even if a company manages to register its token offering, it may not yield significant benefits. Peirce emphasized the importance of compliance for investors, but expressed doubts about the effectiveness of the current regulatory approach.
Criticism of the lack of clarity in the SEC’s approach
These comments from Commissioner Peirce come after LBRY announced its decision to cease operations. The startup faced SEC charges for selling unregistered securities and reportedly received more than $11 million in US dollars, Bitcoin [BTC]and services during the token offering.
In her statement, Peirce disclosed that she was not in favor of initiating the case against LBRY, but that she could not have publicly expressed her concerns while the case was pending.
LBRY initially appealed in hopes of overturning a judge’s decision, which subjected the token to regulatory oversight, along with an order to pay more than $111,614 in fines.
However, the startup later changed course and dropped the profession. As a result of mounting debts to the SEC, its legal team and a private debtor, LBRY announced that its assets, including the Odysee platform, were placed into receivership.
In addition, all of LBRY’s executives, employees, and board members resigned with the intention of meeting their outstanding legal obligations, but nothing more.
The court’s July 2022 ruling neither confirmed nor refuted whether LBRY’s token, LBC, qualified as a security.
Peirce pointed out that this uncertainty meant that the LBRY blockchain could continue to exist, albeit on a more challenging path. She criticized the SEC’s actions in this case, stating that they had forced a group of entrepreneurs to abandon their blockchain project.
According to Peirce, the disproportionate response to LBRY’s case could deter individuals from experimenting with blockchain technology, which the startup described as “technology that enables dissent.”
