Hester Peirce speaks out against LBRY enforcement action: 'The market could have decided'
Hester Peirce of the United States Securities and Exchange Commission (SEC) has issued a dissenting opinion on the regulator’s lawsuit against blockchain firm LBRY.
In an Oct. 27 statement, Peirce described feeling “unsettled” following the SEC’s enforcement action against LBRY in March 2021. In November 2022, a judge ruled in favor of the SEC, stating that the firm’s LBC token was a security. Though LBRY appealed the decision, the company announced in October that it planned to wind down, citing millions of dollars in debt due to legal costs.
“This case illustrates the arbitrariness and real-life consequences of the Commission’s misguided enforcement-driven approach to crypto,” said Peirce.
Some overdue thoughts on our case against LBRY: https://t.co/wLsG4Xr7wz
According to Peirce, the SEC’s case against LBRY was “puzzling” given there was no evidence of fraud and the firm took a conservative approach to digital assets compared to other crypto projects. The SEC commissioner suggested that there had been no clear path for a project like LBRY to come in and register with the regulator, and “it would not be a particularly useful effort” if it had managed to do so.
“[T]he Commission took an extremely hardline approach in this case,” said Peirce. “For example, after winning on summary judgment, the Commission sought monetary remedies of $44 million and asserted that LBRY’s offer to burn all tokens in its possession was not sufficient assurance that LBRY would not violate the registration provisions in the future. The Commission’s requested remedies were entirely out of proportion to any harm.”
She added:
“The Commission’s action forced a group of entrepreneurs to abandon what they built,” said Peirce. “Our disproportionate
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