SEC Knocks LBRY’s $22 Million Fine Down to $111K

In a recent surprise motion, the Securities and Exchange Commission asked a New Hampshire court to reduce penalties for LBRY, a decentralized content platform best known for its video-sharing platform Odysee.

Legitimate business expenses taken into account

Back in November of 2022, a New Hampshire District Court ordered LBRY to pay the SEC $22 million, ruling that LBC’s latest token was an unregistered security due to passing the Howey test.

“The SEC based its claim on a direct application of respected Supreme Court precedent that (…) has been applied across the country for more than 70 years.

The SEC identifies multiple statements made by LBRY that it claims led potential investors to reasonably expect LBC’s value to grow (..). LBRY downplays this statement and points to several disclaimers that it did not intend to purchase LBC as an investment, but the SEC is correct.”

At that time, LBRY oppose The ruling, which states that $22 million is a grossly exaggerated figure and fails to take into account legitimate business expenses incurred developing and hosting its software.

It’s unclear if the SEC took this into account, as the agency’s decision to seek a lesser penalty was allegedly based on LBRY’s inability to pay rather than a change of heart.

Small fines will suffice

The motive behind her decision to follow a Less penaltyThe SEC stated that its sudden decision was made due to the inability of LBRY to pay the principal amount. Currently, LBRY is on the brink of bankruptcy and has stated that it will likely cease all operations in the future.

If the court grants the SEC’s request, LBRY will be left with a $111,614 fine to pay. They will also be prohibited from holding any “future unregistered offers of crypto-asset securities.”

It’s hard to tell if LBRY will be able to bounce back and stay afloat now that the money it owes the US government has dropped dramatically.

Either way, the inability to raise money via crypto has hampered the company’s ability to collect revenue in a way that doesn’t interfere with its users’ experience, which means that the perks that make Odysee an interesting alternative to YouTube may soon be gone — if it stays online in the first place.