LBRY, the blockchain-based file-sharing and payment network, is shifting gears and preparing to challenge the Securities and Exchange Commission's (SEC) ruling, which had initially appeared to mark the end of the platform.
LBRY, the blockchain-based file-sharing and payment network, is undergoing a notable reversal of its earlier decision. Instead of winding down, it has opted to contest a ruling by a federal judge in July that favored the Securities and Exchange Commission (SEC).
Appealing the SEC's Judgment
On September 7, LBRY filed a notice of appeal with the United States Court of Appeals for the First Circuit. This move comes as LBRY seeks to challenge the final judgment handed down on July 11. This judgment had mandated LBRY to pay a civil penalty and prohibited its involvement in unregistered offerings of crypto asset securities going forward.
SEC's Original Lawsuit
The SEC's legal action against developer LBRY, Inc. commenced in March 2021. The SEC alleged that LBRY Credit token (LBC) was marketed as a security under the 1933 Securities Act.
November 2022 Ruling
On November 7, 2022, the U.S. District Court for the District of New Hampshire ruled in favor of the SEC, barring LBRY from offering "unregistered crypto asset securities." Furthermore, the court ordered LBRY to pay a $111,614 civil penalty to the SEC. The regulator initially sought a much larger penalty of $22 million but scaled it back, acknowledging that the now-defunct firm was incapable of paying such a sum.
LBRY's New Direction
In an apparent shift in direction, LBRY is now contesting the SEC's judgment. This decision is noteworthy in a climate where several prominent entities within the crypto industry, including Ripple and Grayscale, have scored significant legal victories against the SEC.