Decentralized Platform LBRY Got Sued By The US SEC: Report

The decentralized platform LBRY apparently didn’t register its securities offering according to the SEC, so they got a lawsuit from the agency as we can see more in our latest cryptocurrency news today.

The decentralized platform LBRY was charged by the SEC with selling unregistered securities. LBRY is a decentralized publishing platform that has more than 10 million users and facilitated operations via LBRY Credits that are blockcahin-based tokens. People are able to pay creators in the credits to view uploaded content.
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According to the SEC, before developing the network, the platform sold the tokens as investment contracts with the assumption that their value will increase. The SEC alleged in a complaint in a US District Court that “LBRY received more than $11 million in U.S. dollars, Bitcoin, and services from purchasers who participated in its offering.”

This amounted to an unregistered sale of securities and violated the Securities Act of 1933:

“LBRY used the capital it raised from sales of LBC to pay for the operational costs to grow the LBRY Network, which, as LBRY publicly represented, would cause the price of LBC held by investors to appreciate. Because LBRY was the largest holder of LBC, it also expected to profit from any appreciation in value of LBC.”

The agency is seeking a permanent injunction against the company and the employees as well as civil penalties and disgorgement.

As reported earlier, US SEC Commissioner Hester Peirce warned that some crypto sales can be seen as illegal if they involve a specific type of crypto assets, especially in some circumstances. During the 3^rd Security Token Summit back on Thursday, the US SEC Commissioner Hester Peirce shed more light on whether Non-fungible tokens are considered securities:

 “The whole concept of an NFT is [it’s] supposed to be non-fungible, so it’s supposed to be unlike anything else, which means that it’s, I think, in general, less likely to be a security, but people are being very creative in the types of NFTs they’re putting out there. It’s a wonder what some people will pay for. I think, given that creativity, as with anything else, you should be asking questions.”

NFTs have quite unique cryptographic attributes meaning that one blockchain can attest to the originality of digital assets and ownership including parcels, virtual lands, and artworks with and collectibles.