The First Circuit Court of Appeals in Boston has instructed LBRY, the blockchain-based content platform, to submit its brief by November 1, 2023. This follows the legal battle between the Securities and Exchange Commission (SEC) and LBRY, culminating in a recent decision against the crypto platform.
Initially, the SEC slapped LBRY with a staggering $22 million penalty, accusing them of raking in that amount from selling its native LBRY Credit tokens (LBC). Subsequently, perhaps in acknowledgment of LBRY’s financial difficulties, the SEC scaled down the penalty to a more “manageable” $111,614.
LBRY cried foul from the get-go. Their argument centered around the notion that the SEC’s initial figure was not just wrong but “vastly” inflated. They argued that the penalty didn’t consider their legitimate operational costs. In December 2022, the specter of shutting down loomed over LBRY, primarily due to these legal pressures.
LBRY Fights Back
Many expected LBRY to wind down operations. However, in a surprising pivot, LBRY has filed a notice of appeal this September. Their primary aim? To challenge the federal judge’s ruling that favored the SEC.
Jeremy Kauffman, the CEO of LBRY, remarked that their appeal emanates from a belief that the SEC’s decision was not only “unjust” but also “incorrect.” Kauffman is concerned that the SEC will use this ruling as a cudgel against the broader cryptocurrency sector.
Why This Case Matters
This latest move by LBRY aligns with recent victories that other cryptocurrency companies like Ripple and Grayscale have chalked up against federal regulators. In 2022, attorney John Deaton, who has also represented XRP holders in the Ripple-SEC lawsuit, joined the LBRY battle as an Amicus Curiae.
Naomi Brockwell, a tech journalist interested in LBRY, also joined the legal conversation. She cited earnings as LBC tokens but clarified that she hadn’t cashed out her holdings.
In sum, as LBRY gears up to submit its brief by the designated deadline, both supporters and skeptics of the cryptocurrency ecosystem are hoping that the case will undoubtedly set a new precedent in the realm of crypto regulation.
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