The United States Securities and Exchange Commission (SEC) has decided to revise its penalty against the decentralized content platform LBRY, recognizing the firm’s inability to pay the original sum. In a recent filing with a New Hampshire District Court, the SEC requested an amendment to its remedies in the case against LBRY.
Instead of the initial $22 million penalty, which represented the alleged gains from LBRY’s token sale, the SEC now seeks a fine of $111,614. The SEC cited LBRY’s financial difficulties and near-defunct status as the rationale behind the reduced amount. Additionally, the SEC urged the court to prevent LBRY from conducting future unregistered crypto asset securities offerings.
Acknowledging LBRY’s claims of being defunct, ceasing operations, and lacking the funds to pay a larger fine, the SEC stated that the defendant’s ability to pay should be considered when imposing a civil penalty.
The SEC first filed a civil suit against LBRY in March 2021, accusing the company of conducting unregistered securities offerings through the sale of its LBRY Credits (LBC). The case concluded in November 2022, with the court ruling that LBC indeed qualified as a security.
LBRY had previously argued that the SEC’s request for $22 million was unreasonable and failed to account for legitimate business expenses. The company stated that the SEC’s calculations were based on rough estimations, lacking support from the actual record.
The revised penalty of $111,614 represents a compromise between deterrence and LBRY’s financial constraints. It is expected that the court will consider the SEC’s request for a reduced fine.
Written By Agbo Obinnaya
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