The LBRY Credits (LBC) token has experienced a significant drop of 24% following a ruling by a federal court that LBRY Inc., the company behind the LBRY protocol, violated US securities laws. The Securities and Exchange Commission (SEC) sued LBRY Inc. in March 2021 for offering unregistered securities. As a result of the ruling, LBRY Inc. is now permanently prohibited from selling unregistered securities unless it registers with the SEC and has to pay a fine of $111,614 within thirty days.

LBRY Inc. Announces Winding Down

In response to the court ruling, LBRY Inc., the decentralized content-sharing project, has announced that it is working on winding down completely. The project’s official Twitter account stated that the company will spend the next few months winding down and the future of LBRY from that point onward is up to the community.

It is worth noting that the SEC did not request a total shutdown of the project in its initial complaint. Instead, the regulator sought to prevent unregistered securities offerings and the return of profits from those activities, as well as impose civil penalties. The SEC pointed out explicit statements on LBRY’s website regarding the sale of LBRY Credits tokens to financially support the project’s operations.

Previous Ruling and Appeal

Last year, LBRY Inc. faced a ruling by Judge Paul J. Barbadoro of the U.S. District Court of New Hampshire, which declared that the project was unable to provide evidence to reject the SEC’s claims. However, LBRY Inc. filed an appeal focused on whether the secondary market sales of LBC tokens should be included in an injunction sought by the SEC. The project won the appeal, but the recent ruling has brought further legal challenges for LBRY Inc.

LBRY Inc.’s CEO, Jeremy Kauffman, tweeted after the ruling that he wants to follow the law but believes that neither the SEC nor the federal judge can dictate what the law allows and doesn’t allow.

Summary

The LBRY Credits token has plummeted by 24% following a federal court ruling that LBRY Inc. violated US securities laws. LBRY Inc. has been prohibited from selling unregistered securities without SEC registration and has to pay a fine of $111,614. The company has announced that it is winding down and ceasing operations. LBRY Inc. faced a previous ruling last year and won an appeal but now faces further legal challenges.

FAQs

What is LBRY Credits?

LBRY Credits (LBC) is a digital token associated with the LBRY protocol, a decentralized content-sharing platform that allows creators to publish their content and monetize it.

Why did LBRY Inc. violate US securities laws?

LBRY Inc. violated US securities laws by offering unregistered securities. The Securities and Exchange Commission (SEC) filed a lawsuit against LBRY Inc. in March 2021 for this violation.

What are the consequences of the federal court ruling?

As a result of the federal court ruling, LBRY Inc. is permanently prohibited from selling unregistered securities unless it registers with the SEC. The company also has to pay a fine of $111,614 within thirty days.

What is the future of LBRY after this ruling?

LBRY Inc. has announced that it is working on winding down completely. The project’s future will be determined by the community.