Hester Peirce was notably straightforward in her evaluation of the Securities and Exchange Commission (SEC) stance on the allegations against the cryptocurrency startup, LBRY.
The agency’s insistence on the clarity of applying securities regulations to token ventures, Peirce contended, was far from evident, contrary to their claims.
Peirce, a strong advocate for cryptocurrencies, expressed her disagreement in a statement released the previous Friday. In her statement, she affirmed, “There is no viable path for a company resembling LBRY to initiate the registration of its functional token proposal.”
She further elaborated, “Even if such a company were to successfully register its token offering, the endeavor would prove to be of limited utility.” She emphasized the significance of compliance for the benefit of investors.
LBRY’s Closure Amidst Regulatory Battles and Candid Reflections of Hester Peirce
Peirce’s critical remarks came shortly after LBRY Inc. disclosed, in a blog post on the 19th of October, that it would cease operations. This determination came after an extended period of legal clashes with the SEC due to the unregistered securities sales. During this time, the company amassed over $11 million in U.S. dollars, Bitcoin, and services through its token offering.
The Commissioner explained her predicament, stating, “I did not lend my support to instigating this lawsuit, yet I remained mute on my concerns, constrained by the ongoing litigation.”
Initially, LBRY pursued an appeal last month in an attempt to overturn the court’s decision, which had placed its token under regulatory scrutiny. This decision also mandated a payment exceeding $111,614. However, the company subsequently changed its direction and chose to forgo the appeal.
“LBRY Inc. finds itself indebted to the SEC, its legal counsel, and a private creditor whose debts it is incapable of settling. All of its assets, including Odysee, are now under the jurisdiction of a receiver.
At the time of this announcement, all executive officers, employees, and board members of LBRY have resigned. They shall diligently fulfill their outstanding legal obligations, but nothing beyond that,” the startup declared last week.
LBRY’s Legal Battle and Hester Peirce’s Concerns
In a ruling delivered in July 2022, the judge abstained from expressing an opinion regarding whether LBRY’s token, known as LBC, meets the criteria for being considered a security. This aspect was highlighted by Peirce. She noted that this decision left the possibility of LBRY’s blockchain enduring, though with a more arduous journey ahead.
Peirce criticized the Commission’s actions, contending that it had compelled a group of innovators to forsake their creation. She emphasized that the Commission’s excessive response to this situation could potentially deter people from exploring blockchain technology. LBRY aptly defines it as a “technology that enables dissent.”