The US Securities and Exchange Commission (SEC) is trying to significantly reduce the punitive fine imposed on decentralized content platform LBRY from $22 million to approximately $111,000. In a request filed with the New Hampshire District Court on Friday, the commission argued that LBRY is unlikely to afford the multimillion-dollar penalty. The SEC has proposed a revised fine of $111,614, citing LBRY’s depleted financial resources and its near-defunct status as the basis for this reduction.
The SEC acknowledged LBRY’s claims that it had ceased operations, lacks funds to pay a larger fine, and is essentially defunct. The commission recognized that the defendant’s ability to pay is a relevant factor when determining the civil penalty amount. Alongside the proposed reduction in the fine, the regulatory agency also urged LBRY to cease any future unregistered offerings of crypto asset securities.
The SEC initially filed a civil lawsuit against LBRY in March 2021, alleging that the platform conducted an unregistered sale of its LBRY Credits (LBC) token, resulting in $22 million in gains. In November of the same year, the SEC secured a victory in the case, with the court ruling that LBRY’s LBC token qualifies as a security and is subject to US securities laws. The ruling stated that LBRY lacked a valid defense claiming a lack of fair SEC notice.
LBRY contended that the LBC token is not a security but a digital currency integral to the LBRY Blockchain. The company argued that the SEC’s request for a $22 million fine was excessive and failed to consider its legitimate business expenses. LBRY accused the commission of inaccurately calculating the amount sought, characterizing the estimation as based on rudimentary calculations that did not align with the actual record.
LBRY has also raised financial viability concerns, as the company anticipates potential ruin due to escalating legal expenses and SEC debts. Launched in 2018, LBRY aims to streamline content distribution and access through its decentralized network. The market capitalization of LBRY’s LBC token currently stands at a modest $6.6 million, categorizing it as a micro-cap token according to global standards. CoinGecko data reveals that the token, currently trading at around $0.0102, reached an all-time high of $1.60 in July 2016.