SEC Files Lawsuit Against Blockchain Startup LBRY

The US SEC has filed a lawsuit against LBRY for failing to register their tokens as securities. LBRY was touting its offering as a decentralized alternative to YouTube.

March 30, 2021 | AtoZ Markets – The US Securities and Exchange Commission (SEC) has filed a lawsuit against the decentralized content publishing platform LBRY. The regulator accused the blockchain startup of selling unregistered securities in the form of an LBC token.

According to the document, since July 2016, LBRY has offered digital assets to “numerous investors,” including US citizens.

The regulator also indicated that LBRY partnered with a cryptocurrency market maker who acted as an intermediary in the buying and selling of LBCs.

The platform team called the SEC allegations a threat to the industry and stressed that LBC tokens are not securities.

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Jeremy Hogan, a lawyer, said about the danger to the industry. Ripple, a Californian company, is “neither the first nor the last,” he said.

Recall that in December 2020, the SEC accused Ripple of selling unregistered securities in the form of XRP tokens.

In February 2021, the commission filed a modified version of the lawsuit , focusing on the actions of the company's co-founder Chris Larsen and CEO Brad Garlinghouse. The latter called the actions of the department " regulatory arbitrariness."

Read also: SEC vs. Ripple Lawsuit Will Drag on Until June 2021

The SEC later asked six banks for data on Larsen and Garlinghouse's personal financial transactions over the past eight years.

Against this backdrop, a number of large cryptocurrency companies and platforms have dropped support for the XRP token. Among them are Coinbase and OKCoin, Galaxy Digital, Grayscale Investments, Bitstamp and MoneyGram. In March, Ripple terminated its partnership with the latter.

In the same month, an SEC lawyer said the sale of XRP by exchanges and other sites did not violate the commission's governing rules.

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