LBRY, a decentralized content-sharing platform, is planning to fight the U.S. Securities and Exchange Commission’s (SEC) judgement against it. The company’s decision to contest the ruling comes as a surprise amid its recent announcement of shutting down due to financial difficulties. This move suggests a possible pivot in LBRY’s strategy, indicating its strong determination to overcome regulatory hurdles and continue providing its users with a decentralized and censorship-resistant platform for content sharing.
LBRY Appeals New Hampshire Judge’s Ruling on Token Sales
LBRY, the decentralized content-sharing and publishing platform, is taking legal action against a ruling by a New Hampshire federal judge that sided with the Securities and Exchange Commission (SEC) in classifying its token sales as unregistered securities. The company has filed an appeal with the United States Court of Appeals for the Second Circuit in an effort to challenge the judgment.
In recent times, other prominent players in the crypto industry, such as Ripple and Grayscale, have also scored victories against the SEC, providing hope for platforms that have been targeted by the regulatory body.
LBRY Challenges SEC Verdict
LBRY, through its management, has argued that the SEC’s verdict was flawed and is actively seeking its reversal. The ruling, issued on July 11, ordered LBRY to pay a civil penalty and prohibited the platform from participating in unregistered offerings of cryptocurrency asset securities in the future.
In the latest filing, LBRY’s management expressed its disagreement with the SEC’s judgment and its intention to challenge it through the appeals process.
LBRY has been under scrutiny by the SEC since March 2021, when the regulator claimed that its LBRY Credit token (LBC) qualified as a security under the 1933 Securities Act. The New Hampshire District Court previously ruled in favor of the SEC, ordering LBRY to pay $22 million for offering unregistered securities. However, LBRY contested the ruling, stating that the amount was excessive and did not consider the legitimate expenses associated with the development and hosting of its software. The SEC later revised the penalty to $111,614.
Despite plans to wind down its operations, LBRY remains hopeful about the outcome of its appeal. Recent victories by Ripple and Grayscale against the SEC have given LBRY renewed hope for a favorable resolution.
Implications for Other Altcoins
The appeal filed by LBRY has raised the possibility of setting a positive precedent for other altcoins that have faced regulatory scrutiny. It is seen as a potential opportunity for platforms to challenge the SEC’s classification of their tokens as securities.
LBRY’s decision to appeal also adds pressure on the SEC, which is already facing pushback after its recent appeal to stay a court decision regarding XRP. The legal team representing LBRY argues that the SEC’s basis for seeking an appeal in the XRP case is primarily driven by its dissatisfaction with the ruling that determined XRP did not meet the criteria for being considered a security in transactions with retail investors.
Overall, LBRY’s appeal and the outcomes of similar cases involving Ripple and Grayscale highlight the growing resistance in the crypto industry against the SEC’s regulatory actions. These developments could potentially reshape the regulatory landscape and provide more clarity for innovative blockchain projects.