Blockchain-based file sharing and payments network LBRY appears to be shifting its stance after initially deciding to shut down in response to a federal judge's ruling in favor of the US Securities and Exchange Commission (SEC) in July. LBRY has now chosen to appeal the decision and fight against the SEC's judgment.
On September 7, LBRY filed a notice of appeal with the US Court of Appeals for the First Circuit, seeking to challenge the final judgment entered on July 11. This judgment had mandated LBRY to pay a civil penalty and prohibited it from participating in unregistered product offerings involving cryptoasset securities.
LBRY's founder and CEO, Jeremy Kauffman, expressed the company's determination to contest the SEC's decision, which they perceive as unjust and incorrect. Kauffman added that the SEC's intentions appear to be aimed at negatively impacting the broader cryptocurrency industry, and LBRY is committed to resisting such actions.
The legal dispute between the SEC and LBRY began in March 2021 when the SEC sued LBRY, Inc., alleging that its LBRY Credit Token (LBC) constituted a security under the Securities Act of 1933. In November 2022, the US District Court for the District of New Hampshire granted the SEC's summary judgment motion against LBRY, ordering the platform not to offer "unregistered crypto-asset securities" and imposing a $111,614 civil penalty.
Originally, regulators sought a $22 million penalty but subsequently adjusted their stance, acknowledging that the now-defunct company could not afford such a sum. Following the July verdict, LBRY seemed to accept the outcome, indicating its intention to fully close LBRY Inc. within the next few months. However, the recent appeal suggests that LBRY may be changing its course.
This development occurs amidst a series of significant victories for the cryptocurrency industry against federal regulators, including notable cases involving Ripple and Grayscale.
