When asked how the blockchain firm could operate legally in the US, the SEC stated that it was not up to the body to offer advice
Blockchain-based publishing platform LBRY has shot back at the Securities and Exchange Commission of the United States asserting that according to the complaint filed against it, most tokens will essentially be defined as securities, threatening the cryptocurrency industry as a whole.
The SEC has alleged in its complaint that the blockchain firm sold unregistered securities across multiple avenues including institutional investors and platform users between 2016 and 2020. The allegations against LBRY are the SEC’s latest action that has been taken as part of a three-year investigation that started in May 2018.
The regulatory body is advocating for a permanent injunction against the blockchain firm, which if granted, will prevent LBRY from selling more tokens. It is also seeking disgorgement of all funds received with interest, and payment of an undisclosed amount in civil penalties.
LBRY’s decentralised video sharing platform Odysee enables users to “earn cryptocurrency for watching videos” and for creators to earn LBRY Credits for their work. 13 million LBC tokens have been sold for $5 million in Bitcoin since 2016. An SEC press release also suggests that about $11 million was raised from purchasers who participated in its offering. All attempts to settle the allegations have been denied by the commission, LBRY has said.
“The SEC declined to offer any terms that would have made it viable for US citizens to exchange tokens or to allow LBRY Inc to continue to operate. We were willing to give them a pound of flesh, but they were only interested in our head”, the blockchain firm has reported, adding, that in case the SEC gets its way, the functioning of the platform won’t be affected.
However, despite spending “more than $1 million on legal fees” and of “several thousand hours of team members’ time” during the investigation, LBRY has announced that it will continue to fight.
“The SEC is advancing an aggressive and disastrous new standard that would make almost all blockchain tokens securities”, the company said, adding that “Classifying all actively-developed blockchain tokens as securities will be a bureaucratic nightmare for United States residents and businesses operating in the US”.
Not only did the SEC refuse to consider a settlement, but when asked how LBRY could operate legally, the regulator also replied that its job was not to advise but to identify when a firm is breaking the law.
A petition by the firm on the website helplbrysavecrypto.com currently has about 7000 signatures and calls upon “the SEC to drop this case and establish clear standards for the cryptocurrency industry in the United States”.