US Securities and Exchange Commission (SEC) asked court to reduce crypto startup LBRY civil fine from $22 million to $111,614 in a previously won lawsuit.
The regulator in March 2021 accused the decentralized content publishing platform of selling unregistered securities in the form of the LBRY Credits (LBC) token.
In November 2022, New Hampshire Judge Paul Barbadoro granted the SEC lawsuit against the blockchain startup.
In a brief filed on May 12, the Commission clarified the final requirements for legal sanctions. The regulator acknowledged that the project would not be able to pay the originally requested $22 million in fines due to “insufficient funds” and “near out of business status.”
The agency reiterated a request for an injunction for the startup to conduct “future unregistered securities offerings.”
“The Commission takes into account LBRY’s statements of termination of operations and lack of funds to pay a larger fine, and also recognizes that the defendant’s ability to pay is a factor in imposing sanctions,” SEC lawyers noted.
At the same time, they indicated that the startup, contrary to promises, did not take any action regarding the termination of further sales of LBC.
At the time of writing, the token is trading near the $0.01 mark. This is more than 99% below the July 2016 high of $1.6.
Attorney James Filan drew the attention of the Ripple community to the outcome of the SEC vs. LBRY case. The regulator in December 2020 accused a Californian fintech startup of selling unregistered securities in the form of XRP tokens. Lawyer Bill Morgan commented on a colleague’s tweet:
“Millions of dollars have been spent in obtaining a fine of $111,614 and the financial destruction of the company. It helps the world.”
Millions of dollars spent for a fine of $111,614.00 and a company financially ruined. That helps the world. https://t.co/GhvCS0Az7s
— bill morgan (@Belisarius2020) May 12, 2023
Recall that Ripple CEO Brad Garlinghouse estimated the firm’s legal costs for ongoing proceedings with the SEC at $200 million.
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