A few months after it filed a lawsuit against Ripple for conducting an unregistered security offering, the SEC has done the same against another blockchain project. This time, it’s going for LBRY – a project operating a decentralized content publishing platform.
$11M Worth of Unregistered Securities Offering?
Based in New Hampshire, US, LBRY Inc is a blockchain-based file-sharing and payment network that powers social networks and video platforms. Although it was founded in 2015, the first sales of its native token – LBRY Credits – began in 2016. Now, though, the US Securities and Exchange Commission has officially charged the company with registration violations in relation to that asset.
The statement informed that LBRY had sold digital asset securities from July 2016 to February 2021 to numerous investors, including such based in the States. However, the Commission alleged that the company had failed to file a registration statement for the offering. As such, the SEC said that the offering “failed to satisfy any exemption from registration.”
Furthermore, the complaint reads that LBRY “denied prospective investors the information required for such an offering to the public.” Ultimately, LBRY has received more than $11 million from the alleged unregistered security sale in USD, BTC, and other types of cryptocurrency assets.
The SEC has charged LBRY with violating the registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933 and seeks “permanent injunctive relief, disgorgement plus prejudgment interest, and civil penalties.”
Back in December, the SEC went after another blockchain company – Ripple – for a similar violation. In that case, though, the Commission alleged the payment processor for conducting unregistered security offering for over $1 billion.
LBRY issued its response on a designated page called “helplbrysavecrypto,” in which the company called SEC’s allegations “tremendous threat to the entire” crypto industry.
The statement reassured all users that since LBRY is a decentralized network, all protocols, apps, channels, content, and token holdings “are not at risk.”
The firm said it had anticipated a similar development, as the SEC has investigated the matter for at least three years.
“Even if LBRY Inc is shut down by the SEC as a result of this lawsuit, the LBRY network will continue to function and grow through the effort of the distributed LBRY community.”
LBRY refuted the SEC’s claims as its token “serves an integral function in our network. It allows individuals to create an identity, tip creators, and publish, purchase, and boost content in a decentralized way.” In contrast, the Commission said that LBRY Credits are used only for speculation.