Commissioner Hester Peirce: “There Is No Path for a Company like LBRY to Come In and Register”
The LBRY case is complex and involves more than just the blockchain network. With the capacity to change the entire way the market trades, enthusiasts in the segment should stay alert to any new developments.
Dive in as we explore SEC Commissioner Hester Peirce’s outspoken views on the SEC’s current playbook. Let’s get to the heart of the matter.
Is SEC’s Grip on LBRY Too Tight?
LBRY was a blockchain network created in 2015 by Jeremy Kauffman and Mike Vine. With open source, it can be used for both financial purposes and content distribution.
In fact, many of its main supporters were looking for a decentralized alternative to services like YouTube or Twitter. His motto was “LBRY does to publishing what Bitcoin did to money.” It currently has more than 10,000,000 users, according to official sources.
However, the company has been facing a long legal process initiated by the United States Securities and Exchange Commission. More specifically, the company faced problems due to its token, LBC, called “LBRY credits.”
The SEC alleged that the cryptocurrency was a fraud, illegally used as a stock, financing part of the operations. This is only permitted when the titles are registered and follow several other procedures.
However, not everyone agrees with this position about the company token. Among the main critics, Hester Peirce has been one of the most vocal.
SEC Commissioner Hester Peirce stated that the entity “adopted an extremely strict approach in this case.” This is mainly due to the US$44 million fine imposed on LBRY after losing the trial. The amount not only made the entire project unsustainable but set a dangerous precedent for similar cases.
Is the “Scorched Earth” Strategy Disproportionate to LBRY Mining Case?
The commissioner also criticized how the SEC handled the trial using a scorched earth approach. Scorched earth, meaning that the accusations effectively damaged the company to the point of making its existence unviable.
Her criticism also came up against other issues: the resources would be better used against companies that actively defrauded SEC rules, causing harm to a large number of people.
In the case of LBRY mining, the illegality was due to how the token was traded. However, the cryptocurrency records were kept correctly, and there was no attempt to deceive any of the many users.
Crypto Project and Registration: A Big Problem for the Segment
Applying securities laws to register cryptocurrency projects is very complicated. As they are totally different assets from stokes and other more traditional assets, most of the requirements cannot be met in full or in part.
This was also a point addressed in Hester Peirce’s statements. According to her, the application of the securities laws to register tokens and crypto projects is not clear, but the commission does not recognize such an obstacle, persisting with a conservative approach.
However, only one crypto project managed to register under the commission’s requirements, Prometheum. Still, she is being investigated precisely because of possible fraud in the license, as they may not have complied with what is necessary to obtain the license.
