The Securities and Exchange Commission (SEC) is revising its punishment against LBRY, a decentralized content platform, recognizing that the firm is unable to pay the originally proposed multimillion-dollar penalty. In a filing on May 12, the SEC requested an amendment to its remedies, seeking a reduced fine of $111,614 instead of the initial $22 million. The SEC cited LBRY’s lack of funds and near-defunct status as the reason for the revision. The commission also requested that LBRY be prohibited from conducting future unregistered offerings of crypto asset securities.
The SEC acknowledged LBRY’s representation of being defunct and without the means to pay a larger fine, considering the defendant’s ability to pay as a factor when imposing a civil penalty. The SEC’s original case against LBRY was filed in March 2021, alleging unregistered securities offerings through the sale of LBRY Credits (LBC). The SEC won the case in November 2022, with the court ruling that LBC was indeed a security. LBRY had argued that the SEC’s initial request for $22 million was unreasonable and overstated. The revised penalty reflects a compromise between deterrence and LBRY’s financial constraints. In December 2022, LBRY expressed concerns about its viability due to the legal and SEC debts it faced.