US Security Regulators Win the Case Against LBRY, a Blockchain-Based Publishing Company

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The US Securities and Exchange Commission has been targeting many crypto companies recently, trying to impose hellish regulations to destroy the industry. Last year, the SEC sued blockchain-based publishing company LBRY for selling LBRY credits without registering them as securities. The company said that its credits were cryptocurrency, but the judge ruled that they were sold as investments, which raised the red flag.

Based in New Hampshire, LBRY sold its unique LBRY credits as a cryptocurrency. The SEC was immediately on it, saying that these were investments rather than cryptos. Of course, the main issue was that they weren’t registered as securities, which puts LBRY’s future in doubt.

Cryptocurrencies Are Illegal, but Some Digital Tokens Are Securities

The controversial SEC has so far ruled that many digital tokens are to be treated as securities, even with cryptocurrencies not exactly legal in the USA. LBRY defended its digital assets by telling the court that they were functional as currency on its platform in the beginning, allowing content creators to earn cash, accept tips, etc. After the court decided otherwise, LBRY’s CEO Jeremy Kaufmann was disappointed, saying that this tirade against his company threatens the cryptocurrency industry as a whole.

LBRY’s defense that it lacked notice that the law applied in this case was also rejected by the judge. According to Kaufmann, this was the first case where the SEC alleged registration violations against a digital tokens issuer that didn’t conduct a coin offering first. At the time of the ruling, the digital coins had a market value of $12.74 million. That was the price registered on Coinbase. That’s over half their worth in March, but TerraUSD’s implosion made sure there was a broad downturn in the market.

After the ruling, the company tweeted that it’s done playing nice. They also attached a screenshot to the tweet of LBRY’s co-founder Alex Grintsvayg chatting that lawyers told him it’s OK to attend a case that looks sharp, but smells awful. Apparently, the whole thing was orchestrated as psychological warfare to ward off other companies from doing the same thing. The tweet gained a lot of attention, with LBRY later admitting it was partly a joke. But, the fact that they don’t like the SEC is true, and Grintvayg later joked that he’d eat a plate of garlic to ward off new attacks.

How to Launch a Public Blockchain in the USA?

The worst thing about this ruling, as LBRY said, is that after five years of legal battles, the company still doesn’t know how to legally launch a public blockchain. That’s been the case with others too, with the SEC shutting down such cases, but still not providing details on the matter. To be honest, it looks like the securities exchange doesn’t know what it’s doing, but it is shutting down companies attempts to try something new.

As a result, the cryptocurrency market is suffering. If it continues its tirade without clear terms, it’ll be an even bigger problem for cryptocurrencies and their already-dwindling prices.

November 9, 2022: • No Comments

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