LBRY, the blockchain-based file-sharing and payment network, has disputed a federal judge’s verdict that favored the Securities and Exchange Commission (SEC). LBRY has filed an appeal notice against the judgment, indicating a possible reversal in its intention to wind down.
The notice of appeal, submitted on September 7, 2023, seeks to overturn the final verdict issued on July 11, 2023. In that decision, LBRY was not only forced to pay a civil penalty but also barred from participating in future unregistered offerings of crypto asset securities.
The legal struggle began in March 2021 when the SEC filed a complaint against LBRY, Inc. The SEC claimed that the LBRY Credit token (LBC) was being offered as a security, violating the 1933 Securities Act.
On November 7, 2023, the United States District Court for the District of New Hampshire sided with the SEC, issuing a summary judgment against LBRY. This ruling prevented the platform from issuing “unregistered crypto asset securities” and assessed a civil penalty of $111,614 on the platform. Notably, the SEC initially sought a far greater penalty of $22 million but then reduced its demand to reflect the company’s defunct state.
Jeremy Kauffman, the founder and CEO of LBRY, expressed pessimism in January, noting that “LBRY as a company is almost certainly dead.” This sentiment was bolstered by a tweet from LBRY following the final decision in July, in which they stated their intention to wind down the company.
However, LBRY’s recent move to appeal the judgment indicates a possible shift in strategy. This result comes from significant triumphs for the cryptocurrency industry over the SEC, including high-profile lawsuits involving Ripple and Grayscale.
LBRY’s appeal has refocused attention on this blockchain initiative, and the conclusion of this court struggle might have far-reaching consequences for the regulatory landscape of cryptocurrency offerings. The crypto community will monitor the case at the United States Court of Appeals for the First Circuit to see if LBRY can turn the tide in its favor.