The US Securities and Exchange Commission (SEC) ‘s commissioner, Hester Peirce, has raised concerns over the regulator’s lawsuit against blockchain company LBRY.
Early this year, the SEC filed a lawsuit against LBRY, alleging that the company’s digital token, LBC, should be classified as a security.
However, the legal battle reached its conclusion in November 2022 when a judge ruled in favor of the SEC.
As a result, LBRY recently announced its plans to close down due to substantial legal expenses.
In a statement on October 27, Peirce criticized the SEC’s approach, deeming it misguided, especially in the absence of any evidence supporting allegations of fraudulent activities by LBRY.
Peirce also observed that LBRY had exercised more caution in managing digital assets compared to many other cryptocurrency projects.
Furthermore, she raised questions about the SEC’s position on regulating the cryptocurrency industry and criticized the SEC for not offering clear guidance that would have facilitated proper registration for companies like LBRY.
Peirce argued that even if LBRY had successfully registered with the SEC, it would not have been a productive endeavor.
The commissioner further expressed her concerns about the SEC’s aggressive pursuit of substantial monetary penalties, amounting to $44 million, and their assertion that LBRY’s proposal to burn all its tokens was insufficient as an assurance of future compliance with registration regulations.
“The time and resources we expended on this case could have been devoted to building a workable regulatory framework that companies like LBRY could have followed. Then the market could have decided LBRY’s fate.” she said. “The Commission’s action forced a group of entrepreneurs to abandon what they built.