The Securities and Exchange Commission’s Hester Peirce did not mince words in her dismay of the agency’s handling of charges against crypto startup LBRY.
Despite the agency’s assertions that the application of securities laws to token projects is clear, the crypto-friendly commissioner argued in a statement on Friday that that is not the case.
“There is no path for a company like LBRY to come in and register its functional token offering,” Peirce said. “Even if a company did manage to register its token offering, it would not be a particularly useful effort.”
Compliance is important for investors, Peirce added.
Peirce’s comments come days after LBRY Inc. said in a blog post on Oct. 19 that it will be shutting down years after the SEC first charged the startup with selling unregistered securities and said the firm received more than $11 million in U.S. dollars, Bitcoin, and services during its token offering.
“I did not support bringing the case, but have been unable to speak publicly about my concerns while the case has been in litigation,” Peirce said.
Appeal not moving forward
LBRY had initially appealed last month in an attempt to reverse the judge’s decision that ruled its token was subject to regulatory oversight and ordered LBRY to pay over $111,614. However, LBRY changed course and said it would not be moving forward with its appeal.
“LBRY Inc. has debts to the SEC, its legal team, and a private debtor that it cannot pay. Its assets, including Odysee, are being placed into receivership. As of this post, all LBRY executives, employees, and board members have resigned. All will be doing what is required to satisfy any outstanding legal requirements, but no more,” the startup said last week.
In the July 2022 ruling, the judge declined to comment on whether LBRY’s token LBC was a security, which Peirce said means that the LBRY blockchain could live on, but on a more difficult path.
“The Commission’s action forced a group of entrepreneurs to abandon what they built. Our disproportionate reaction in this case will dissuade people from experimenting with blockchain technology, which LBRY aptly describes as “technology that enables dissent,” Peirce said.
