The United States securities regulator is seeking to modify a $22 million penalty against decentralized content platform LBRY, acknowledging that it cannot cough up the funds to pay it.
In a May 12 filing in a New Hampshire District Court, the Securities and Exchange Commission (SEC) requested an amendment to its request for remedies in its successful lawsuit against LBRY.
Instead of seeking the original $22 million — the amount LBRY claimed to have earned from the sale of its LBRY Credits (LBC) token, the SEC asked the court to impose a fine of $111,614, citing the “lack of funding and the status of LBRY is about to disappear. .”
The request also requests that LBRY be stopped from “conducting future unregistered offerings of crypto asset securities.”
“The Commission acknowledges LBRY’s representations that it has ceased operations, ceased operations, and has no funds to pay a larger fine, and recognizes that the ability of a defendant to pay is a factor when imposing a civil penalty,” the SEC said in the filing.
Millions of dollars were spent for a fine of $111,614.00 and a company that was financially damaged. That would help the world. https://t.co/GhvCS0Az7s
— bill morgan (@Belisarius2020) May 12, 2023
The SEC first filed a civil case against LBRY in March 2021 alleging that the company’s LBC sales were unregistered securities offerings. It is seeking $22 million in disgorgement and for the court to order LBRY to stop any further sales to LBC.
The SEC won the case in November 2022m, the previous Judge also ruled that LBC is a security.
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The SEC said the lesser penalty was a compromise between “the need to balance the deterrence from a penalty with the lack of payment to LBRY.”
In a December filing, LBRY admitted that the SEC’s request for $22 million was unreasonable because it was “too large” and failed to “deduct any legitimate business expenses of LBRY.”
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, about a month after the SEC won the case a month earlier, LBRY said it was “likely to die in the near future” because it was “killed by legal and SEC liabilities.”
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