Hester Peirce, a Commissioner at the Securities and Exchange Commission, has voiced her concerns about the agency’s approach to the crypto startup LBRY. She believes applying securities laws to token projects is anything but straightforward.
In a strong statement released on Friday, Peirce highlighted the impracticalities and challenges token offerings face in the current regulatory landscape.
LBRY’s Challenge with SEC Regulations
Peirce expressed that there is no straightforward path for companies like LBRY to register their functional token offerings. She noted that even if a company were to register its token offering successfully, the effort would likely be in vain. Moreover, Peirce emphasized the importance of compliance for protecting investors. However, she pointed out that the existing framework does not facilitate this need.
A week ago, LBRY shared in a blog post that it would be ceasing operations. This announcement came years after the SEC first charged the startup with selling unregistered securities. They claimed the firm garnered over $11 million in various currencies and services during its token offering. Peirce disclosed that she had not favored pursuing the case from the onset. She remained silent due to legal restrictions while the case was ongoing.
LBRY faced further challenges when a judge ruled its token was subject to regulatory oversight. The startup decided not to proceed with an appeal. They expressed their financial inability to settle debts with the SEC, their legal team, and a private debtor. Following these events, all executives, employees, and board members at LBRY resigned.
Peirce highlighted the survival of LBRY’s blockchain despite the difficulties imposed by the SEC’s actions. She argued that this situation showcases the stifling effect of disproportionate regulatory reactions on blockchain technology innovation. Consequently, she calls for reevaluating the SEC’s approach to foster a more encouraging environment for blockchain experimentation.
Also Read: LBRY Ceasing Operations, SEC Battle Ends