LBRY files notice of appeal against court July decision that buckled the project
The appeal is a change of pace for embattled developers, who had previously signaled an intent to wind down operations in July
Maurice Norbert/Shutterstock, modified by Blockworks
Blockchain-based content-sharing platform LBRY has filed a notice of appeal against a July court decision that sided with the SEC over alleged securities violations.
The appeal, filed Thursday, seeks to challenge a ruling by the First Circuit Court’s final judgment, which imposed a fine on the company and restricted it from participating in future offerings.
It’s a change of pace for the embattled company, which had previously signaled an intent to wind down operations immediately following the court’s decision two months ago.
Initially, the SEC sought a penalty of $22 million against the company, alleging that its LBRY Credit tokens (LBC) were unregistered securities back in March 2021.
The commission, however, scaled back its demands to just over $111,000 in May of this year, citing the company’s “near-defunct” status and lack of funds, Blockworks previously reported.
A request for disgorgement, commonly used to reclaim ill-gotten gains, was withdrawn by the SEC.
Even though LBRY didn’t undertake a traditional initial coin offering, it still acted like a security by keeping tokens it created early on and then selling them later, the regulator argued at the time.
The court’s decision came as a blow to LBRY and its CEO Jeremy Kauffman, who have repeatedly argued that the classification of LBC as a security could endanger the broader US crypto market by establishing precedent.
LBRY’s own decision to appeal Thursday comes amid a series of victories for crypto industry firms including Ripple and Grayscale, who have also battled against federal regulatory judgments.
Last month, Grayscale was granted a small victory in the DC Circuit Court of Appeals when a three-judge panel mandated the SEC review the digital asset management firm’s application to convert its flagship trust into a spot bitcoin ETF.
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- 0xResearch: Alpha in your inbox. Think like an analyst.
- Empire: Crypto news and analysis to start your day.
- Forward Guidance: The intersection of crypto, macro and policy.
- The Drop: Apps, games, memes and more.
- Lightspeed: All things Solana.
- Supply Shock: Bitcoin, bitcoin, bitcoin.
