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Crypto Firm LBRY to Challenge Ruling It Violated U.S. Securities Law
Crypto startup LBRY filed its intent to appeal a New Hampshire court’s decision that it failed to register with the U.S. Securities and Exchange Commission (SEC).
The SEC filed suit in 2022 alleging the blockchain-based file-sharing network had violated federal securities laws with the sale of its native LBRY credits (LBC), which the firm maintained were not securities. A New Hampshire judge ruled in favor of the SEC in November and the final ruling was filed on July 11. Following the ruling, LBRY said it would shut down.
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Under the ruling, LBRY must pay a $111,614 penalty. That was revised down from $22 million in May by the regulator citing the company’s “near-defunct status.” The company was also “permanently restrained and enjoined from” participating, directly or indirectly, in violating federal securities laws or any unregistered crypto securities offering.
Blockchain platform Ripple Labs is facing similar SEC allegations over the sale of $1.3 billion in XRP tokens. Legal experts have told CoinDesk that a federal judge’s July ruling partially in favor of Ripple – that direct sales of XRP to institutional investors violated securities law, but programmatic sales to retail investors through exchanges had not – could give hope to other firms involved in similar cases.
LBRY shared its intension to fight the ruling on its X (formerly Twitter) account Thursday. LBC has dropped about 6% in the past 24 hours to $0.013, CoinGecko data shows.
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CoinDesk has reached out to LBRY for further comment.
Edited by Sheldon Reback.
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