It looks like the United States Securities and Exchange Commission (SEC) is opening up fresh lawsuits against cryptocurrency companies for conducting token sales, which the SEC considers illegal securities offering. After a massive lawsuit against blockchain payments company Ripple, the SEC has now filed a lawsuit against New Hampshire-based crypto startup LBRY Inc., accusing the company of selling unregistered securities in the form of its token.
LBRY is a decentralized content publishing platform, and according to the company the platform’s native token LBRY, also dubbed as LBRY Credits, is used to publish and buy content. But, the SEC’s complaint argues that LBRY Credits are securities and the company’s token sales were an unregistered offering to investors.
“According to the SEC’s complaint, from at least July 2016 to February 2021, LBRY, which offers a video sharing application, sold digital asset securities called “LBRY Credits” to numerous investors, including investors based in the US,” the SEC said in a statement published Monday. “The complaint alleges that LBRY did not file a registration statement for the offering and that the offering failed to satisfy an exemption from registration.”
The suit adds that LBRY Inc. “received more than $11 million in U.S. dollars, Bitcoin, and services from purchasers who participated in its offering.”
An attack on the industry
Meanwhile, LBRY states that this lawsuit was a broader attack on the entire cryptocurrency industry in the United States, similar to the events that have unfolded previously with major names like messenger app Kik and, more recently, distributed ledger firm Ripple.
“The Securities and Exchange Commission has filed a complaint against LBRY Inc alleging that all distributions of LBRY Credits by LBRY Inc are unregistered securities offerings,” the firm wrote in the FAQ section of its website which was launched following the lawsuit’s filing.
“This claim is a tremendous threat to the entire cryptocurrency industry.”
The company also noted that it had been the subject of an SEC inquiry for three years now, adding:
“LBRY Inc has been preparing to fight this case for three full years, which is how long the SEC has been investigating this matter. We wanted to tell you sooner, but transparency in ongoing investigations is not welcomed by the SEC.”