SEC sues LBRY because of $11 million in token sales.
The SEC says that the decentralized publishing platform LBRY did not register its securities offering.
The Securities and Exchange Commission or SEC, has charged the crypto firm LBRY for allegedly selling unregistered securities.
LBRY, a decentralized publishing platform that is claiming over 10 million users, facilitated its operation through LBRY credits, which are blockchain-based tokens. People can also pay the creators with LBRY Credits in order to view the uploaded content.
However, according to the SEC, before developing the network, it has sold the tokens as investment contracts, with the assumption that their value will go up. With all has been said, alleged the SEC in a complaint that was filed today in a US District Court.
“LBRY received more than $11 million in U.S. dollars, Bitcoin, and services from purchasers who participated in its offering.”
This, states the SEC, has amounted to an unregistered sale of securities, with a violation of the Securities Act of 1933.
“LBRY used the capital it raised from sales of LBC to pay for the operational costs to grow the LBRY Network, which, as LBRY publicly represented, would cause the price of LBC held by investors to appreciate,” the SEC stated in its complaint. “Because LBRY was the largest holder of LBC, it also expected to profit from any appreciation in value of LBC.”
It is seeking a permanent injunction against the company and its employees and also the civil penalties and disgorgement.
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