LBRY Under Fire: SEC Sues Decentralized Content Sharing Platform
Months after the start of the Ripple saga, the Securities and Exchange Commission (SEC) has sued blockchain-based platform LBRY, creating fears of further risk for the cryptocurrency industry.
The SEC filed a complaint against LBRY in the District Court of New Jersey on March 29th for, “failure to register an offering of securities pursuant to the Securities Act of 1993.”
According to the complaint, LBRY would have offered and sold millions of dollars worth of unregistered securities in the form of its cryptocurrency, violating the act in the process.
The complaint affirms that the assets sold by LBRY constitute securities due to them being sold and offered as investment contracts, as well as the dependence of the managerial efforts of LBRY directly affecting the returns on any investment.
As LBC tokens were sold as investment contracts in exchange for Dollars and cryptocurrencies, receiving more than $11 million in backing at the time of the offering, which was then used to pay or operational costs, this amounted to a breach of the securities Act of 1993.
According to court documents, the commission is seeking a permanent injunction preventing the platform from participating in “any unregistered digital asset securities offering”, as well as the payback of all “ill-gotten gains”.
LBRY Is Looking to Rally Community Support
Hours after the news of the SEC complaint against LBRy, the project published a tweet asking the community to “HELP US SAVE CRYPTO.” as “The future of crypto in the US is at risk.”, a concern shared by cryptocurrency advocates ever since the SEC’s move against Ripple labs.
HELP US SAVE CRYPTO
The future of crypto in US is at risk.The SEC are suing us and saying LBC is a security – it’s not!https://t.co/ALAVmgDsDI#helplbrysavecrypto pic.twitter.com/bJIOOgXeyY
— LBRY (@LBRYcom) March 29, 2021
The Tweet links to the helplbrysavecrypto website, which aims to inform visitors of the risks that a classification of all actively-developed blockchain tokens as securities implies for the growing industry in the United States.
A Change.org petition and Twitter campaign have also been launched to increase awareness about the latest move against the crypto industry by one of the most important institutions in the United States.
Jeremy Hogan, lawyer and Partner at Hogan & Hogan, tweeted about the SEC move by saying: “Just today the SEC filed another lawsuit against a crypto-currency company – LBRY, Inc. and the LBC coin. Ripple wasn’t the first and won’t be the last. The whole industry is at risk.”
Former SEC Chairman Joins One River as Crypto Advisor
While the current administration of the SEC moves once again against the crypto industry, former SEC Chairman Jay Clayton joined One River Asset Management as an advisor on matters concerning cryptocurrency.
While Clayton’s SEC was the one that declared that Bitcoin and Ethereum were not securities, it was also the administration behind the complaint against Ripple Labs in December of 2021, as well as blocking initial coin offerings and applications for Bitcoin Exchange-Traded Funds (ETFs).
Mr. Clayto referred to the current status of the crypto market by stating: “I see a wide range of outcomes for digital assets that include strong government regulation, domestically and globally, The time frame is uncertain, but I expect there will be international coordination if not international consensus around digital assets.”
His administration’s lawsuit against Ripple recently found a setback when thousands of XRP holders submitted a motion to intervene in the case which was approved by Judge Analisa Torres on March 2th after originally being denied by the same judge earlier in March.
While the complaint against LBRY is the latest move by the SEC against the crypto industry, the case against Ripple has been one of the most important legal cases in the history of cryptocurrency and it is sure to have a significant impact on the future of regulation in the world’s biggest economy.
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OhNoCryptocurrency via https://www.ohnocrypto.com/ @Nicholas Say, @Khareem Sudlow