LBRY, a blockchain-based file-sharing and payment network, has now chosen to fight the SEC’s ruling and filed a notice of appeal, signaling a renewed determination to continue its mission.
LBRY’s Legal Battle with the SEC
The Securities and Exchange Commission (SEC), in its pursuit to regulate the crypto space, took issue with LBRY’s business model and deemed its cryptocurrency, known as LBRY Credit token (LBC), to be a security. The SEC argued that LBRY had conducted an unregistered securities offering, a violation of U.S. securities laws.
The court’s ruling barred LBRY from offering “unregistered crypto asset securities” and imposed a $111,614 civil penalty on the company. Meanwhile, the SEC had initially sought a much more substantial penalty of $22 million but adjusted its demand, recognizing the financial limitations of the now-defunct firm.
Following the court’s ruling, LBRY’s founder and CEO, Jeremy Kauffman, made a somber statement in January. He indicated that “LBRY as a company is almost certainly dead,” echoing the sentiment that the SEC’s actions had taken a significant toll on the platform.
LBRY’s Renewed Fight
However, LBRY’s recent move has surprised many in the crypto community. On September 7, 2023, the company filed a notice of appeal with the United States Court of Appeals for the First Circuit, challenging the final judgment that had previously appeared to spell the end for the platform.
This decision to appeal signals LBRY’s determination to continue its mission of creating a decentralized content-sharing platform. The company’s supporters see this as a bold and principled stance against what they view as overregulation by the SEC.
LBRY believes that its cryptocurrency, LBC, is not a security but rather a utility token, a distinction that could have far-reaching implications for the blockchain industry.
The Broader Context
LBRY’s decision to appeal comes at a time when several high-profile crypto projects have notched victories against the SEC.
Notable cases include Ripple and Grayscale, both of which have made progress in their legal battles with the federal regulator. These victories have emboldened the crypto industry, signaling that it can stand up to regulatory scrutiny and, in some cases, achieve favorable outcomes.