SEC Sues LBRY Over Accusation of Unregistered Securities
canopic jug writes:
LBRY, an MIT-licensed, decentralized protocol competing against the likes of YouTube, has an accompanying cryptocurrency. After a three year investigation, the SEC is now suing LBRY Inc, the developer, for $11 million. The SEC is making the accusation that the tokens amount to unregulated security, or tradable financial assets. The LBRY protocol is used by services like Odysee and others.
Apparently the SEC complaint fails to acknowledge steps LBRY has been taking to comply with the law. So far LBRY has spent more than $1 million in legal fees and that, despite multiple attempts to get advice on legal operation from the SEC, none were given.
The Securities and Exchange Commission today charged LBRY, a blockchain company, with conducting an unregistered offering of digital asset securities.
According to the SEC's complaint, from at least July 2016 to February 2021, LBRY, which offers a video sharing application, sold digital asset securities called "LBRY Credits" to numerous investors, including investors based in the US. The complaint alleges that LBRY did not file a registration statement for the offering, and that the offering failed to satisfy any exemption from registration. The complaint further alleges that by failing to file a registration statement, LBRY denied prospective investors the information required for such an offering to the public. As alleged, LBRY received more than $11 million in U.S. dollars, Bitcoin, and services from purchasers who participated in its offering.
The SEC's complaint, filed in the federal district court in New Hampshire, charges LBRY with violating the registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933. The SEC seeks permanent injunctive relief, disgorgement plus prejudgment interest, and civil penalties.
LBRY now has a FAQ for the lawsuit because, if the case is as they frame it, all cryptocurrency development will be profoundly affected by the outcome of this case.
Read more of this story at SoylentNews.