SEC Commissioner Dissents Against Enforcement Action on LBRY, Raises Concerns about Agency's Approach

Introduction

A commissioner from the U.S. Securities and Exchange Commission (SEC) has released a statement dissenting against the agency’s enforcement action against the blockchain-based file-sharing payment network LBRY. In a lengthy statement, SEC Commissioner Hester Peirce expresses her puzzlement regarding the SEC's decision to bring a case against LBRY, as there was little evidence of fraud. She questions why the SEC targeted LBRY, which she believes had a legitimate real-world application, instead of pursuing other digital asset projects engaged in illegal activities.

The SEC's Harsh Approach

Commissioner Peirce criticizes the SEC's enforcement actions against LBRY, stating that the agency's requested remedies were disproportionate to any harm caused. She highlights the fact that LBRY had a functioning blockchain with an established use and argues that the SEC should have focused on projects that were outright frauds and did not comply with securities laws.

The Lawsuit and Reduced Fine

The SEC initially filed a lawsuit against LBRY in 2021, alleging that the company sold unregistered securities. In November 2022, a judge ruled in favor of the SEC. However, in May, the SEC reduced the fine imposed on LBRY from $22 million to $111,000.

Conclusion

Commissioner Peirce's dissenting statement raises concerns about the SEC's enforcement action against LBRY. She questions the agency's decision to target LBRY, which she believes had a legitimate use case, and argues that the SEC should have focused on projects engaged in fraudulent activities. Her statement highlights the need for a more balanced and proportionate approach to regulating the blockchain and digital asset industry.