Wednesday, 12 June 2024
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CryptoCrypto Regulations

SEC Seeks $111K in Compensation After Reducing its Fine

As it is unlikely that LBRY would be able to come up with the money to be able to pay it, the US securities commission is attempting to get its $22 million fine against the decentralised content platform lowered.

The Securities and Exchange Commission sought to amend its demand for remedies in its successful lawsuit against LBRY in a document filed on May 12 in a New Hampshire District Court.

Penalty to SEC

The SEC has asked the court to impose a fine of $111,614 on LBRY instead of the original $22 million it had requested, claiming the cryptocurrency made money through the sale of its token LBRY Credits (LBC).

It did this by referencing LBRY’s “lack of funds and near-defunct status.” As part of the request, it is also asked to prevent LBRY from “conducting future unregistered offerings of crypto asset securities.”

  • Due to LBRY’s failure to pay the $22 million fine, the US Securities and Exchange Commission is attempting to decrease it.
  • The SEC acknowledged in its filing that LBRY was defunct, ceasing operations, and unable to pay a greater fine.
  • In November 2022, the SEC was successful, and the previous judge had also determined that LBC was a security.

The SEC acknowledged in its filing that LBRY was defunct, ceasing operations, and unable to pay a greater fine. The ability of the defendant to pay is a consideration when imposing a civil penalty, according to the Commission.

In March 2021, the SEC initially brought a civil lawsuit against LBRY, claiming that the company’s LBC sales were unregistered securities offers. It urged the court to order LBRY to stop all future LBC sales and for $22 million in disgorgement. In November 2022, the SEC was successful, and the previous judge had also determined that LBC was a security.

Based on “the need to balance the deterrence of a penalty with LBRY’s inability to pay,” the Securities and Exchange Commission says the lower penalty resulted from an agreement.

In a document from December, LBRY said that the SEC’s demand for $22 million wasn’t reasonable because it was “vastly” exaggerated and failed to “deduct any of LBRY’s legitimate business expenses.”

According to LBRY, the SEC’s assessment of the total was “based on rough, back-of-the-envelope math” and the amount it requested was “simply not supported by the record.” Nearly a month after the SEC prevailed in the lawsuit, in December 2022, LBRY predicted that it “will likely be dead in the near future” due to being “killed by legal and SEC debts.”

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