LBRY sued for $ 11 million token sale

The US Securities and Exchange Commission (aka the SEC) has sued the decentralized content platform LBRY. The platform has reportedly sold and continues to sell unrecorded securities.

Permanent Prohibition of Token Sale LBRY

This is evidenced by newly published court documents reportedly filed yesterday. It became clear that the peer-to-peer (p2p) content distribution network LBRY is currently being accused of selling unregistered securities to investors. With this, the platform would now generate millions of US dollars in revenue. The platform is said to have done this since 2016 to date.

Tough demands are made, as a result of which the company is declared bankrupt should the demands be honored. For example, the securities regulator is seeking a permanent ban against LBRY to sell even more tokens. In addition, ill-gotten gains should now be repaid plus interest. However, it is still very questionable whether the judge will go along with these hard demands, or whether a milder approach will be considered.

LBRY Credits

The securities would be sold in the form of LBRY Credits (aka LBC). These tokens have mainly been disclosed to investors in the past. At the time, it was a way of raising extra money for the company, which they could use to finance the further growth of the platform.

LBRY’s decentralized platform is an open source protocol that allows users to post content without fear of retaliation. According to the SEC, these LBC tokens were sold for the US dollars and some other non-monetary contributions.

The network has since enlisted the help of the crypto community and their users via Twitter, claiming that the entire industry in the United States (US) is at risk. At the same time, the company states that credits are not the same as securities.

Potentially misuse 40 million LBC tokens

The US SEC claims that the content platform gave the impression that it could make a profit when it couldn’t do it at all. This is due to a tweet from crypto lawyer “Grant Gulovsen” and allegations that LBRY has engaged a vendor to use 40 million LBC tokens from its institutional fund. This made it possible to act as a market maker. This market maker would then have acted as an intermediary to regularly and continuously trade LBC tokens at the then current market prices. This is not allowed according to the SEC, and if it really is, it could possibly be penalized.

The US SEC has taken more harsh action against crypto and blockchain companies since the first public coin offering (ICO) in 2017. Although these crypto and blockchain companies claim to operate outside of US securities laws, the US SEC has imposed restrictions on these companies. The US SEC wants to protect potentially vulnerable investors from potential risks associated with this, so it is now cracking down on it. However, it is up to the judge to determine exactly what went wrong and, if so, how it will be punished. It is not yet known at this time what the judgment will be exactly.

Lost Password