“The market could decide.”
Hester Peirce of the United States Securities and Exchange Commission (SEC) issued a separate opinion on the regulator's lawsuit against blockchain company LBRY.
In an Oct. 27 statement, Pierce expressed “unsettled” sentiment following the SEC's March 2021 enforcement action against LBRY. In November 2022, a judge ruled in favor of the SEC, stating that the company's LBC token was a security. Although LBRY appealed the decision, the company announced in October that it planned to jump, citing the fact that it was millions of dollars in debt due to legal fees.
“This case illustrates the arbitrary and real-life consequences of the commission's flawed enforcement-oriented approach to crypto,” Pearce said.
Some late thoughts on our case at LBRY: https://t.co/wLsG4Xr7wz
— Hester Peirce (@HesterPeirce) October 27, 2023
According to Pierce, the SEC's case against LBRY was based on the lack of evidence of fraud and the fact that the company took a conservative approach to digital assets compared to other crypto projects. The SEC commissioner pointed out that there was no clear way for a project like LBRY to register with the regulator, and if it could do so “it would not be a particularly worthwhile effort.”
“[T]”The commission has taken a very strong approach to this,” Pearce said. For example, after winning summary judgment, the Commission asserted that LBRY's request to burn all of its tokens, seeking $44 million in monetary damages, was insufficient proof that LBRY would not violate the registry provisions in the future. The remedies requested by the Commission are wholly disproportionate to the harm.
she added.
“The time and resources we spent on this matter could have been spent building a workable regulatory framework that companies like LBRY could follow. Then the market could have decided LBRY's fate.”
“The commission's action forced a group of entrepreneurs to abandon what they had built,” Pearce said. “Our disproportionate response to this issue is discouraging people from experimenting with blockchain technology.”
RELATED: SEC Revises $22M Fine on LBRY, Seeks $111K Instead
Peirce is often the voice of dissent at the SEC on crypto-related enforcement issues. In September, she told Cointelegraph that crypto companies should not give up on trying to launch in the United States, but she believed that the Commission was “too far behind” to find a regulatory framework solution.
Gary Gensler, who heads the SEC, has repeatedly called on crypto companies to “come and talk” with the regulator to avoid enforcement action. To date, the regulator has filed lawsuits against crypto exchanges Binance and Coinbase and several other firms in the space.
Magazine: Crypto Regulation: Does SEC Chairman Gary Gensler Have Final Comments?
