Things are getting intense for blockchain firm LBRY as it was recently accused by the US Securities and Exchange Commission. This accusation could bring some problems for the tech firm as the regulator believes that it had broken federal laws by selling and trading unregistered securities. Some months ago, the regulator had claimed that Ripple had broken the same law by XRP’s sales.
The regulator claimed that the fintech company had sold the securities without following necessary steps, which are essential before a firm could conduct a token offering. LBRY has taken steps to explain to the regulatory body that the tokens were not securities, similar to Ripple’s argument.
LBRY believes that the SEC case could cause problems for industry
The tech company has spoken on the allegations, and it believes that the case could cause some problems for the rest of the digital asset industry. The tech company replied to the watchdog’s claims. It revealed that a complaint filed against itself could mean many industry problems as the regulator would see most tokens as securities.
The Securities and Exchange Commission has been investigating the LBRY case for almost three years now. The issues started when the federal body claimed that the blockchain firm had sold securities without registering them. This had caused a series of investigations conducted to find the truth behind the issue.
After SEC’s continuous investigation, it has concluded that the firm had sold unregistered securities on various trading platforms, which includes selling to both institutional and small-scale investors. The watchdog explained that the sales happened from 2016 to 2020. The department wants the court to grant an injunction to prevent the blockchain firm from selling tokens, refund all money gotten with interests, and pay a fine.
The crypto-related firm has been very active in the industry as it created a video sharing site some time ago to allow users to earn cryptos for watching videos. The site is called Odysee, and it gives those video creators credit for their works watched by the viewers.
SEC refuses to settle
The firm had conducted numerous token sales, where it sold around 13 million LBC, which is worth around $5 million. The regulator explained that the firm had earned a total of $11 million from its fundraising. LBRY revealed that it had not been involved in an initial token offering, and the regulator did not dispute the claims but has refused to settle things amicably with the business. LBRY explained that it tried to settle things, but that SEC was not interested in that.
The company has already spent a lot on legal fees and numerous avenues to ensure a settlement of the present problems. The company would not back down, and it wants to prevent new precedence that would be fatal for the whole industry. The firm believes that the SEC’s classification of all tokens as securities is a “bureaucratic nightmare ” for US residents. People have tried to help the company by signing an online signature to ensure the regulator drops the case against the blockchain firm.