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posted by Fnord666 on Friday April 02 2021, @09:48PM   Printer-friendly
from the funny-money-becomes-not-so-funny dept.

LBRY, an MIT-licensed, decentralized protocol competing against the likes of YouTube, has an accompanying cryptocurrency. After a three year investigation, the SEC is now suing LBRY Inc, the developer, for $11 million. The SEC is making the accusation that the tokens amount to unregulated security, or tradable financial assets. The LBRY protocol is used by services like Odysee and others.

Apparently the SEC complaint fails to acknowledge steps LBRY has been taking to comply with the law. So far LBRY has spent more than $1 million in legal fees and that, despite multiple attempts to get advice on legal operation from the SEC, none were given.

The Securities and Exchange Commission today charged LBRY, a blockchain company, with conducting an unregistered offering of digital asset securities.

According to the SEC's complaint, from at least July 2016 to February 2021, LBRY, which offers a video sharing application, sold digital asset securities called "LBRY Credits" to numerous investors, including investors based in the US. The complaint alleges that LBRY did not file a registration statement for the offering, and that the offering failed to satisfy any exemption from registration. The complaint further alleges that by failing to file a registration statement, LBRY denied prospective investors the information required for such an offering to the public. As alleged, LBRY received more than $11 million in U.S. dollars, Bitcoin, and services from purchasers who participated in its offering.

The SEC's complaint, filed in the federal district court in New Hampshire, charges LBRY with violating the registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933. The SEC seeks permanent injunctive relief, disgorgement plus prejudgment interest, and civil penalties.

LBRY now has a FAQ for the lawsuit because, if the case is as they frame it, all cryptocurrency development will be profoundly affected by the outcome of this case.


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  • (Score: 1, Interesting) by Anonymous Coward on Friday April 02 2021, @10:43PM (8 children)

    by Anonymous Coward on Friday April 02 2021, @10:43PM (#1132665)

    Maybe you should make sure your business is in compliance before doing business?

    Too bad other regulators allow illegal shit like Uber.

    • (Score: 1, Insightful) by Anonymous Coward on Saturday April 03 2021, @12:15AM (1 child)

      by Anonymous Coward on Saturday April 03 2021, @12:15AM (#1132683)

      more likely LBRY was not innovating into the right pockets like the others.

      • (Score: 0) by Anonymous Coward on Saturday April 03 2021, @02:06AM

        by Anonymous Coward on Saturday April 03 2021, @02:06AM (#1132712)

        True, that. The local Public Utility Commission dutifully attacked Über and Lyft to protect the incumbent cab companies, but these companies neglected to pay off the mayor. Über and Lyft did, and the PUC was frustrated, and the cab companies had to finally compete.

    • (Score: 1, Insightful) by Anonymous Coward on Saturday April 03 2021, @02:45AM (1 child)

      by Anonymous Coward on Saturday April 03 2021, @02:45AM (#1132725)

      Tneynwere, the SEC chanhed the rules and now says they cannot tell them a way to operate legally.

      It is just standard shakedown until you pay enough of the right people to get them to stop.

      • (Score: 0) by Anonymous Coward on Saturday April 03 2021, @02:51AM

        by Anonymous Coward on Saturday April 03 2021, @02:51AM (#1132729)

        My touch keyboard no working right.

    • (Score: 2) by tangomargarine on Saturday April 03 2021, @03:31AM (1 child)

      by tangomargarine (667) on Saturday April 03 2021, @03:31AM (#1132748)

      Apparently the SEC complaint fails to acknowledge steps LBRY has been taking to comply with the law. So far LBRY has spent more than $1 million in legal fees and that, despite multiple attempts to get advice on legal operation from the SEC, none were given.

      --
      "Is that really true?" "I just spent the last hour telling you to think for yourself! Didn't you hear anything I said?"
      • (Score: 3, Insightful) by Anonymous Coward on Saturday April 03 2021, @04:09AM

        by Anonymous Coward on Saturday April 03 2021, @04:09AM (#1132759)

        That smells like grounds for a counter-suit for malicious prosecution. Regulations are necessary for a functional society but they should never be used as a political weapon.

    • (Score: 0) by Anonymous Coward on Saturday April 03 2021, @10:13AM

      by Anonymous Coward on Saturday April 03 2021, @10:13AM (#1132811)

      Indeed, the key issue AFAICT is that the LBRY company did a large "pre-mine" for the tokens, where they privately generated a significant percentage of all available LBRY tokens before opening up mining/trading to the public. They then waited for the LBRY network to become more popular, and so raise the value/price of the tokens, before selling off pre-mined tokens to make money for the company.

      I imagine the SEC is seeing this as equivalent to a company selling half their shares in an IPO, then selling some of the remaining shares once the shares are considered more valuable. And there's nothing wrong with doing that, so long as the company follows securities regulations.

    • (Score: -1, Flamebait) by Anonymous Coward on Saturday April 03 2021, @07:16PM

      by Anonymous Coward on Saturday April 03 2021, @07:16PM (#1132932)

      stfu, you suck-ass piece of shit!

  • (Score: 0) by Anonymous Coward on Saturday April 03 2021, @01:28AM (2 children)

    by Anonymous Coward on Saturday April 03 2021, @01:28AM (#1132702)

    Are they selling NFTs or something? Or is it an advertising platform?

    • (Score: 0) by Anonymous Coward on Saturday April 03 2021, @02:36AM

      by Anonymous Coward on Saturday April 03 2021, @02:36AM (#1132718)

      Blockchain for file sharing, video sites, and social media.

    • (Score: 0) by Anonymous Coward on Saturday April 03 2021, @03:11PM

      by Anonymous Coward on Saturday April 03 2021, @03:11PM (#1132890)

      Duh, they sell LBRY tokens that you can use for, um...

  • (Score: 5, Insightful) by crafoo on Saturday April 03 2021, @04:09AM (1 child)

    by crafoo (6639) on Saturday April 03 2021, @04:09AM (#1132760)

    Yeah. Yeah. It felt too good to last. Too much free speech. Too little meddling and oversight from our benevolent rulers. It could have turned into real competition for NSA/Youtube.

    • (Score: -1, Flamebait) by Anonymous Coward on Saturday April 03 2021, @07:18PM

      by Anonymous Coward on Saturday April 03 2021, @07:18PM (#1132933)

      yeah. big surprise the SEC works for JewTube and the international banking cartel and has no integrity.

  • (Score: 5, Interesting) by Mojibake Tengu on Saturday April 03 2021, @04:12AM (6 children)

    by Mojibake Tengu (8598) on Saturday April 03 2021, @04:12AM (#1132762) Journal

    A critical project of LBRY is Odysee:

    https://odysee.com/ [odysee.com]

    Odysee is both technically and financially directly dependent on LBRY blockchain running.
    The more videos uploaded, the more compute power for LBRY blockchain.

    So, this legal step is a direct attack on political alternative who managed to evade YouTube censorship.
    Many authors banned by Google/YouTube, Facebook and Twitter already went there many weeks ago.

    I wonder why SoylentNews did not mentioned this most important political factor of this situation.

    --
    Respect Authorities. Know your social status. Woke responsibly.
    • (Score: 0) by Anonymous Coward on Saturday April 03 2021, @06:18AM

      by Anonymous Coward on Saturday April 03 2021, @06:18AM (#1132779)

      Thank you for that. Bookmarked.

    • (Score: 0) by Anonymous Coward on Saturday April 03 2021, @01:43PM

      by Anonymous Coward on Saturday April 03 2021, @01:43PM (#1132864)

      Perhabs because it's not a significant aspect. They are just one alternative to youtube. There are fx. plenty of Peertube instances available and it's possible to set up your own.

    • (Score: 0) by Anonymous Coward on Saturday April 03 2021, @02:42PM

      by Anonymous Coward on Saturday April 03 2021, @02:42PM (#1132878)

      Yes, the only reason that I've heard about Lbry is that it's an alternative to YouTube and even then, only because YouTube has been engaging in shenanigans to prevent certain classes of YouTubers from getting found or monetized. It's not even like they're going after just Neo-Nazis and kiddie diddlers either, simply calling out the rich and powerful is enough to get demonetized and deranked.

    • (Score: 1) by khallow on Saturday April 03 2021, @06:56PM (1 child)

      by khallow (3766) Subscriber Badge on Saturday April 03 2021, @06:56PM (#1132928) Journal

      I wonder why SoylentNews did not mentioned this most important political factor of this situation.

      Probably because they didn't know about it. FWIW, I hadn't heard of either LBRY or Odysee.

      As to the merits of the SEC case, I'm of the opinion that the SEC is worse than useless. But it's the sort of thing that would attract SEC attention no matter what product LBRY was peddling.

      • (Score: 2) by DeVilla on Thursday April 08 2021, @06:52PM

        by DeVilla (5354) on Thursday April 08 2021, @06:52PM (#1134918)

        I heard of them because Brian Lunduke (of LINUX SUCKS! fame) moved over there.

    • (Score: 0) by Anonymous Coward on Saturday April 03 2021, @07:29PM

      by Anonymous Coward on Saturday April 03 2021, @07:29PM (#1132936)

      The LBRY blockchain and desktop app will continue to work regardless of the outcome of this attack, but by strangling LBRY, inc., the Jews/SEC hope to kill off odysee.com, which is the biggest threat to JewTube.

  • (Score: 4, Insightful) by Rosco P. Coltrane on Saturday April 03 2021, @10:29AM (1 child)

    by Rosco P. Coltrane (4757) on Saturday April 03 2021, @10:29AM (#1132815)

    the appropriate payola didn't happen.

    • (Score: 1, Funny) by Anonymous Coward on Saturday April 03 2021, @10:41AM

      by Anonymous Coward on Saturday April 03 2021, @10:41AM (#1132816)

      What's sad is that your post has no mods at all. No idealists modding you down because there is no one left believes you are wrong, and no-one modding you up because the conclusion that those in power are corrupt is so blindingly obvious that it doesn't deserve a mod.

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