KryptoCurrency

November 23, 2024
Crypto

LBRY says it ‘will likely be dead’ following SEC loss

By akohad Dec1,2022

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The firm behind the decentralized content platform LBRY said its days are likely numbered following its recent loss against the United States Securities and Exchange Commission (SEC) in court.

The SEC initially took LBRY Inc to court in Mar. 2021 over its LBRY Credit (LBC) tokens, alleging that the firm had been conducting unregistered securities offerings since 2016.

The SEC ultimately won that battle last month on Nov. 7, after a judge deemed the tokens to be securities in a major blow to the industry. 

Providing an update on the state of the business via Twitter on Nov. 30, LBRY Inc explained that the company “will likely be dead in the near future,” however the underlying protocol and blockchain will carry on:

“We’d like to be upfront about the fact that LBRY Inc. will likely be dead in the near future. We expect the LBRY mission to continue on, but the company itself has been killed by legal and SEC debts.”

LBRY Inc essentially provides a blockchain-based alternative to YouTube that offers less stringent censorship policies on its hosted content. The platform also facilitates direct tips in LBC to content creators as opposed to the standard advertising revenue share model.

In the SEC’s case against LBRY, it alleged that LBC was designed for pure speculation, while LBRY had argued that the tokens served key utility functions for its platform such as tipping, publishing, purchasing and boosting video content.

Despite the SEC winning the court dispute, LBRY suggested on Twitter earlier this week that the government agency has continued to be difficult to deal with in terms of settlement negotiations.

Responding to a post about its Nov. 29 status report on its ongoing SEC negotiations, the company noted that it offered the SEC “everything we have” but this proposal was still rejected.

Defense lawyer and former federal prosecutor James Filan questioned whether this was due to the SEC seeking out more drastic stipulations on future LBC sales.

“Let me guess. That’s because they want a Consent Judgment that also includes a specific agreement that every sale, even on the secondary markets, is a sale of a security,” he said.

In response, the LBRY Inc team simply supplied an emoji showing their lips are sealed.

It is also worth noting that Filan, who has 131,000 followers on Twitter, has remained up to date with the LBRY case due to his long running commentary on the ongoing dispute between the SEC and XRP creators Ripple Labs.

Related: LBRY alleges Apple forced it to censor certain terms amid COVID-19 pandemic

The cases are of a similar nature to each other in that the SEC has aggressively pushed to get both LBRY and XRP deemed as securities in court. Given that these are some of the first major crypto and securities related court cases, the outcomes could be seen as reference points for future rulings in the future.