The US securities regulator is seeking to review its $22 million sanction against decentralized content platform LBRY, acknowledging that it is unlikely to be able to raise the funds to pay for it.
In a brief filed May 12 in a New Hampshire district court, the Securities and Exchange Commission (SEC) requested a modification of its petition for appeals in its successful case against LBRY.
Rather than claim the original $22 million – the amount it claims LBRY earned from the sale of its LBRY Credits (LBC) token – the SEC has asked the court to impose a $111,614 fine, citing “lack of funds and the near-disappearance status” of LBRY.
The request also calls for LBRY to be prevented from “making future unregistered offerings of crypto asset securities.”
“The Commission acknowledges LBRY’s statements that it has disappeared, ceased operations, and lacks the funds to pay a larger fine, and acknowledges that a defendant’s ability to pay is a factor in imposing a fine. civil penalty,” the SEC said in the filing.
Millions of dollars spent for a fine of $111,614.00 and a company financially ruined. That helps the world. https://t.co/GhvCS0Az7s
— bill morgan (@Belisarius2020) May 12, 2023
The SEC first filed a civil lawsuit against LBRY in March 2021 alleging that the company’s LBC sales were unregistered security offerings. He asked for USD 22 million in damages and for the court to order LBRY to stop any further sale of LBC.
The SEC won the case in November 2022, the precedent judge also ruling that LBC was a security.
The SEC said the lesser penalty was a compromise between “the need to balance the deterrence of a penalty with LBRY’s inability to pay.”
In a December filing, LBRY argued that the SEC’s $22 million request was unreasonable, as it was “grossly” overstated and did not “deduct any of LBRY’s legitimate business expenses.”
LBRY said the SEC’s calculation of the amount was “based on estimates” and that the requested amount was “simply not supported by the record.”
In December 2022, about a month after the SEC won the case a month earlier, LBRY said she was “likely to be dissolved in the near future” because she was being “killed by SEC and legal debt.”
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