The United States securities regulator is seeking to revise its $22 million punishment against decentralized content platform LBRY, acknowledging it is unlikely to be able to cough up the funds to be able to pay it.
In a May 12 filing in a New Hampshire District Court, the Securities and Exchange Commission (SEC) sought an amendment to its request for remedies in its successful case against LBRY.
Instead of seeking the original $22 million — the amount it claims LBRY gained from the sale of its token LBRY Credits (LBC), the SEC has asked the court to impose a fine of $111,614, citing LBRY’s “lack of funds and near-defunct status.”
The request also asks to stop LBRY from “conducting future unregistered offerings of crypto asset securities.”
“The Commission acknowledges LBRY’s representations that it is defunct, ceasing operations, and without the funds to pay a larger fine, and recognizes that a defendant’s ability to pay is a factor when imposing a civil penalty,” the SEC said in the filing.
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
The SEC first filed a civil suit against LBRY in March 2021 alleging the firm’s LBC sales were unregistered securities offerings. It asked for $22 million in disgorgement and for the court to order LBRY to halt any further LBC sales.
The SEC won the case in November 2022m, the preceding Judge also ruled LBC was a security.
Related: Jump Trading faces lawsuit over alleged $1.3B profit from TerraUSD
The SEC said the smaller penalty was a compromise between “the need to balance the deterrence from a penalty with LBRY’s inability to pay.”
In a December filing, LBRY claimed the SEC’s request for $22 million wasn’t reasonable as it was “vastly” overstated and failed to “deduct any of LBRY’s legitimate business expenses.”
LBRY said the SEC’s calculation of the sum was “based on rough, back-of-the-envelope math” and the amount it sought was “simply not supported by the record.”
In December 2022, around a month after the SEC won the case a month prior, LBRY said it “will likely be dead in the near future” due to being “killed by legal and SEC debts.”
Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?