The US Securities and Exchange Commission is attempting to reduce its $22 million penalty against decentralized content provider LBRY, conceding that it is unlikely to be able to pay it.
The Securities and Exchange Commission (SEC) sought a modification to its request for remedies in its successful action against LBRY in a May 12 filing in a New Hampshire District Court.
Instead of demanding the original $22 million — the amount it alleges LBRY earned from the sale of its token LBRY Credits (LBC) — the SEC now requested a fine of $111,614, noting LBRY’s “lack of funds and near-defunct status.” The petition further requests that LBRY refrain from “conducting future unregistered offerings of crypto asset securities.”
“The Commission acknowledges LBRY’s representations that it is defunct, ceasing operations, and without funds to pay a larger fine, and recognizes that a defendant’s ability to pay is a factor when imposing a civil penalty,” the SEC said in the filing.
In March 2021, the SEC filed a civil claim against LBRY, alleging that the company’s LBC sales were unregistered securities offers. It requested $22 million in disgorgement and that the court order LBRY to stop all further LBC sales. In November 2022, the SEC won the case, and the prior Judge also decided that LBC was a security.
The reduced penalty, according to the SEC, was a compromise between “the need to balance the deterrence from a penalty with LBRY’s inability to pay.” LBRY argued in a December filing that the SEC’s request for $22 million was unreasonable since it was “vastly” exaggerated and did not “deduct any of LBRY’s legitimate business expenses.”
According to LBRY, the SEC’s calculation of the figure was “based on rough, back-of-the-envelope math,” and the amount requested was “simply not supported by the record.” In December 2022, roughly a month after the SEC won the case the previous month, LBRY stated that it “will likely be dead in the near future” due to being “killed by legal and SEC debts.”