- The Court ruled in November 2022 that LBRY owed the SEC $22 million.
- It’s token LBC met the Howey test and hence qualified as unregistered securities.
The Securities and Exchange Commission (SEC) recently made headlines when it urged a New Hampshire court to reduce the fines levied on LBRY, the decentralized content platform best known for its video-sharing platform Odysee.
The New Hampshire District Court ruled in November 2022 that LBRY owed the SEC $22 million because its token LBC met the Howey test and hence qualified as unregistered securities. LBRY fought against the verdict, arguing that $22 million doesn’t account for reasonable business expenditures like those it spent while creating and running its software.
Purported Inability to Pay
However, it is unclear if this was taken into consideration by the SEC since the agency has reportedly decided to recommend a reduced sanction due to LBRY’s purported inability to pay rather than a change of heart.
The SEC explained its unexpected choice to seek a smaller penalty by citing LBRY’s inability to pay the original sum. LBRY has declared that it is nearing insolvent and will likely halt all activities in the future. If the court agrees with the SEC, LBRY will be required to pay a fine of $111,614 dollars. To add insult to injury, they will no longer be able to conduct any “unregistered offerings of crypto asset securities.”
It’s hard to say whether LBRY will be able to recover and survive after its debt to the U.S. government was significantly reduced.
Odysee’s interesting features, which make it a viable alternative to YouTube, may soon be gone if the company is unable to raise funds via cryptocurrency. This is assuming, of course, that the service continues to operate at all.