The Securities and Exchange Commission (SEC) has recently reduced the $22 million fine imposed on LBRY, a blockchain-based content platform, to just $111,000 in a lawsuit settlement. This news has come as a relief to LBRY, which had been facing the possibility of bankruptcy due to the hefty fine.
The lawsuit was filed by the SEC in March 2021, alleging that LBRY had sold unregistered securities in the form of its cryptocurrency, LBRY Credits (LBC). The SEC claimed that LBC was a security and therefore subject to federal securities laws. LBRY, on the other hand, argued that LBC was a utility token and not a security.
The SEC’s initial ruling in May 2021 ordered LBRY to pay a fine of $15 million in disgorgement and $7.5 million in civil penalties. However, LBRY appealed the ruling, arguing that the SEC had overstepped its authority and that LBC was not a security.
In the settlement agreement reached between LBRY and the SEC, LBRY agreed to pay a reduced fine of $111,000 and to register LBC as a security. The registration process will involve providing investors with information about the token’s risks and benefits, as well as financial statements and other disclosures.
The settlement is seen as a victory for LBRY, which had argued that the SEC’s initial ruling would have set a dangerous precedent for other blockchain-based companies. The ruling would have made it difficult for such companies to raise funds through token sales without running afoul of securities laws.
The settlement also highlights the need for clarity in the regulation of cryptocurrencies and blockchain-based platforms. The SEC has been criticized for its lack of clear guidelines on what constitutes a security in the context of cryptocurrencies. This lack of clarity has led to confusion and uncertainty among blockchain-based companies, many of whom have been hesitant to launch token sales for fear of running afoul of securities laws.
In conclusion, the SEC’s decision to reduce LBRY’s fine to $111,000 in the lawsuit settlement is a positive development for the blockchain-based content platform. The settlement provides clarity on the regulatory status of LBC and sets a precedent for other blockchain-based companies. However, it also highlights the need for clear guidelines on the regulation of cryptocurrencies and blockchain-based platforms to avoid confusion and uncertainty in the future.
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- Source: https://zephyrnet.com/sec-shows-mercy-against-lbry-in-lawsuit-reduces-22000000-fine-to-111000-the-daily-hodl/