The First Circuit Court of Appeals in Boston has ordered LBRY, the blockchain-based content platform, mandating the submission of its brief no later than November 1, 2023. This development marks a significant chapter in the legal dispute between LBRY and the Securities and Exchange Commission (SEC).
A Costly Clash
Initially, the SEC imposed a substantial penalty of $22 million on LBRY, accusing the company of amassing this sum through the sale of its native LBRY Credit tokens (LBC). However, the SEC later revised the penalty to a more “manageable” $111,614, possibly acknowledging LBRY’s financial challenges.
LBRY cried foul from the get-go. Their argument centred around the notion that the SEC’s initial figure was not just wrong but “vastly” inflated. They argued that the penalty didn’t consider their legitimate operational costs. In December 2022, the possibility of shutting down loomed over LBRY, primarily due to these legal pressures.
LBRY Fights Back
Many expected LBRY to wind down operations. However, in a surprising pivot, LBRY has filed a notice of appeal this September. Their primary aim? To challenge the federal judge’s ruling that favored the SEC.
Jeremy Kauffman, the CEO of LBRY, remarked that their appeal emanates from a belief that the SEC’s decision was not only “unjust” but also “incorrect.” Kauffman is concerned that the SEC will use this ruling as a cudgel against the broader cryptocurrency sector.
Here’s Why You Should Care
This latest move by LBRY aligns with recent victories that other cryptocurrency companies like Ripple and Grayscale have chalked up against federal regulators. In 2022, attorney John Deaton, who has also represented XRP holders in the Ripple-SEC lawsuit, joined the LBRY battle as an Amicus Curiae.
Naomi Brockwell, a tech journalist interested in LBRY, also joined the legal conversation. She cited earnings as LBC tokens but clarified that she hadn’t cashed out her holdings.
In sum, as LBRY gears up to submit its brief by the designated deadline, both supporters and skeptics of the cryptocurrency ecosystem are hoping that the case will undoubtedly set a new precedent in the industry. Could this finally lead to SEC leaving crypto alone? Only time can really tell.