The U.S. Securities and Exchange Commission (SEC) has charged LBRY with violating securities laws, saying that the company conducted an unregistered securities offering.
The SEC has ramped up its efforts to tackle securities law violations in recent months.
Officially, the SEC has charged LBRY with conducting an unregistered securities offering, similar to what it charged Ripple (and many others) with. It claims that LBRY did not file a registration statement and consequently, it “denied prospective investors the information required for such an offering to the public.” LBRY raised more than $11 million in various assets.
LBRY runs a decentralized network with a video sharing application, in which users can receive LBRY credits. The SEC claims that LBRY sold over 13 million LBC tokens to investors between 2016 and 2020.
The SEC applies the Howey Test to check if an asset is a security or not. The test is roughly 70 years old. The outdated nature can make it difficult to assess an asset class like cryptocurrencies.
LBRY Fighting the Case
LBRY itself is firm in its stance, choosing to fight the case with the help of the community. It has already launched petitions and pleas to the public to “help save crypto.”
Furthermore, it mentions that “the SEC is advancing an aggressive and disastrous new standard” which could endanger the market.
In a post, the company stated,
“The SEC is attempting to make nearly all cryptocurrencies illegal. LBRY is facing a challenge from the SEC under a new standard that would destroy the United States cryptocurrency industry.”
It then says that this could go on to affect most crypto assets on the Ethereum blockchain, including Ethereum itself. However, this claim seems partly dubious, as the SEC has already declared that Ethereum is not a security back in 2018.
Ripple too is in the middle of a high-profile case with the SEC, adamantly denying that it conducted an Initial Coin Offering (ICO). It’s the most significant of lawsuits so far, and the company is fighting the allegations until the end. A decision on the case should arrive by June.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.