A federal judge has ruled that video sharing application provider LBRY violated the registration provisions of federal securities laws when it issued, offered and sold crypto asset securities called LBRY Credits or LBC.
The ruling in the United States District Court for the District of New Hampshire granted a Securities and Exchange Commission (SEC) motion for summary judgment against LBRY, the SEC reported Monday (Nov. 7) in a litigation release.
The SEC’s complaint alleged that LBRY sold LBRY Credits to investors between July 2016 and February 2021, that this was an offering and sale of securities, that LBRY did not file a registration statement for the offering, and that it failed to provide prospective investors with the required information.
LBRY received about $12.2 million in proceeds from its sale of LBRY Credits, according to the SEC.
“The SEC’s complaint charges LBRY with conducting an unregistered offering and sale of crypto asset securities,” SEC said in the release. “The SEC seeks permanent injunctive relief, disgorgement plus prejudgment interest, and civil penalties.”
In its Monday ruling, the court said it would determine relief at a later date.
PYMNTS has reached out to LBRY for comment.
In a statement posted Monday on the website of its browser tool Odysee and linked within a Twitter thread on the topic, LBRY said: “The ruling in the case SEC vs LBRY case is out and LBRY, as well as the entire cryptocurrency industry, have lost. We will not let this stop our mission to achieve content freedom. A more detailed update will be posted soon.”
In related news, the SEC announced Sept. 9 that it will add an Office of Crypto Assets to its Division of Corporate Finance’s Disclosure Review Program (DRP).
This new office will do the work currently done across the DRP to look over filings involving cryptocurrencies.
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