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The US securities regulator declared war on cryptocurrencies in 2023 and continues its struggle. The institution, which made its last calls in December, also said that crypto companies would regret not registering with the SEC in 2023. But there is a problem, companies that want to register with the SEC are not provided with guidance on how to do so.
LBRY Token Case
The Securities and Exchange Commission (SEC) on Friday asked a court to reduce a $22 million fine against LBRY, acknowledging that the decentralized streaming platform may not be able to afford its multimillion-dollar penalty. The financial watchdog is now asking a court to impose a lower penalty of $111,614, while at the same time rejecting a separate requirement to disgorge $22 million in ill-gotten gains.
According to court documents, the reason behind this request is that the company has been dissolved. In other words, the SEC seems convinced that it cannot afford to pay such a large fine. In addition to the $22 million fine, the agency had initially asked for the repayment of $22 million, which it defined as ill-gotten gains.
SEC Stepped Back
LBRY CEO Jeremy Kauffman argued in a written statement that this was not a good faith move. According to him, the SEC had backed down and did not want things to get even more complicated.
“The SEC’s decision to no longer seek compensation should not be read as a change of heart, but as pure self-interest. The SEC thought it would lose and wanted to avoid a bad precedent. However, it is a positive sign for LBRY that all this may finally be coming to an end soon.”
Kauffman added that Odysee, a subsidiary of LBRY, still has a bright future. Still, Kauffman claimed that the blockchain-based media platform, along with all other blockchain firms, is under threat from the SEC, calling the agency’s actions “arbitrary and hostile.”
In November, the SEC won the case and LBC Token was labeled as an unregistered security. The agency argued that LBC tokens were sold before LBRY’s network was fully developed to raise capital and cover operational costs. The token’s value has fallen 99% from its ATH level of $1.66.
The most important detail in this case was the decision that the sale of tokens in secondary markets could not be blocked. The LBC token’s victory in this regard shows that cryptocurrencies declared as securities can continue to be traded on exchanges, even if they face penalties.
