A commissioner of the U.S. Securities and Exchange Commission (SEC) has released a statement opposing the agency’s enforcement actions against blockchain-based file sharing payment network LBRY.
In a lengthy statement, SEC Commissioner Hester Peirce said the SEC’s action against LBRY is “confusing” because there was not much evidence that the company committed fraud.
“The Commission has taken many troubling crypto enforcement actions, but the LBRY, Inc. case (‘LBRY’) particularly upset me…
This sad reality makes the Commission’s decision to bring a case against LBRY particularly confusing. LBRY’s approach was more conservative than the approach of many other projects. Here, the blockchain was operational at the time most of the tokens were sold, and the Commission’s complaint did not allege, and the court found no evidence of fraud.”
According to Peirce, the SEC focused on LBRY – which it believes offered a real-world application – rather than pursuing other digital asset projects that clearly engaged in illegal activities. Additionally, Peirce says 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 numerous other projects that were outright fraud and did not attempt to comply with securities laws? To make matters worse, the Commission has taken an extremely harsh approach in this case.
For example, after winning summary judgment, the Commission sought monetary damages of $44 million, claiming that LBRY’s offer to burn all tokens in its possession was not a sufficient guarantee that LBRY would not violate the registration provisions in the future . The measures requested by the Commission were completely disproportionate to the possible damage.”
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 regulator.
In May, the SEC showed some mercy to LBRY and reduced the fine from $22 million to $111,000.
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