LBRY Inc – the company responsible for developing the LBRY protocol – announced that it would cease operations after receiving a final judgment in its case from the United States Securities and Exchange Commission (SEC) on Tuesday.
Since the announcement, the LBRY (LBC) token has crashed 14% in value.
- A federal judge sided with the SEC in decision that LBRY violated Section 5 of the Securities Act of 1933 in its issuance of LBC.
- As such, it has withheld and permanently banned any new broadcasts of any “safety” unless registered in advance with the commission.
- LBRY is also required to pay a fee of $111,614 for its breach within the next thirty days. This is a massive reduction from the SEC’s original fee request, which was $22 million.
- On Twitter, LBRY confirmed that it would be shutting down its operations completely, with the community free to decide how to use its LBC token.
The final judgment in SEC vs LBRY is out.
In accordance with the court order and our promises, we plan to spend the next few months winding down LBRY Inc. completely.
As for what happens to LBRY from here, well, that’s up to you. pic.twitter.com/cU8O3nATT6
— LBRY 🚀 (@LBRYcom) July 11, 2023
- LBRY is a decentralized content platform known for its video sharing platform, Odyssey. The platform used LBC as an internal currency with which creators could charge viewers to stream their content or earn tips.
- Throughout the case, the SEC noted that one of the explicitly stated uses of LBRY for LBC was to “financially support its operations”, which is one of the characteristics of a security according to the Howey test.
- Ultimately, Judge Paul Barbadoro ruled in November that “no reasonable trier of fact could reject the SEC’s assertion that LBRY offered LBC as collateral.”
- The case is believed to set a dangerous precedent for other crypto creators, who fear their token issuance models may have been illegal according to the SEC.
- In June, the agency alleged that several top cryptos were securities in a lawsuit against Coinbase, including Cardano (ADA), Solana (SOL), and Polygon (MATIC).
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