LBRY, the blockchain-based file-sharing and payment network, appears to be reversing its earlier decision to wind down its operations. In a significant development, LBRY has filed a notice of appeal against a federal judge’s ruling in July that favored the U.S. Securities and Exchange Commission (SEC).
On September 7, LBRY submitted a notice of appeal to the United States Court of Appeals for the First Circuit. This appeal seeks to challenge the final judgment that was entered on July 11, 2023. In that judgment, LBRY was ordered to pay a civil penalty and was barred from participating in unregistered offerings of crypto asset securities in the future.
LBRY vs SEC
The legal dispute between LBRY and the SEC dates back to March 2021 when the SEC initially sued LBRY, Inc. The SEC alleged that the LBRY Credit token (LBC) constituted a security under the 1933 Securities Act.
The U.S. District Court for the District of New Hampshire granted the SEC’s motion for summary judgment against LBRY on November 7, which not only barred the platform from offering “unregistered crypto asset securities” but also mandated that it pay a $111,614 civil penalty to the SEC. It’s worth noting that the SEC had originally sought a much larger penalty of $22 million but reduced it after recognizing that the now-defunct firm couldn’t afford such an amount.
In January, Jeremy Kauffman, the founder and CEO of LBRY, had expressed bleak prospects for the company, stating that “LBRY as a company is almost certainly dead.”
Following the final judgment in July, LBRY appeared to confirm this bleak outlook when they tweeted,
“In accordance with the court’s order and our promises, we expect to spend the next several months winding LBRY Inc. down entirely.”
However, LBRY’s recent decision to file an appeal indicates a potential change in direction. This move comes in the wake of several notable victories in the crypto industry against the SEC, including those of Ripple and Grayscale.
