Hester Peirce, a commissioner at the United States Securities and Exchange Commission (SEC), has voiced her disagreement with the SEC’s lawsuit against blockchain firm LBRY. In a statement released on October 27th, Peirce expressed her unease about the SEC’s enforcement action against LBRY in March 2021. A judge ruled in favor of the SEC in November 2022, declaring that LBRY’s LBC token was a security. Despite LBRY appealing the decision, the company recently announced its plans to wind down due to substantial legal costs.
Peirce criticized the SEC’s approach to the LBRY case, stating that it was puzzling given the lack of evidence of fraud and LBRY’s conservative approach to digital assets compared to other crypto projects. She also noted that there was no clear path for a project like LBRY to register with the regulator, making the SEC’s actions seem unjust.
“The Commission took an extremely hardline approach in this case,” Peirce remarked. “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.”
According to Peirce, the time and resources dedicated to this case could have been better spent creating a workable regulatory framework that companies like LBRY could have followed. She believes that the Commission’s actions have discouraged experimentation with blockchain technology and forced a group of entrepreneurs to abandon their project.
Peirce has consistently been a dissenting voice within the SEC when it comes to crypto-related enforcement cases. In a previous interview with Cointelegraph, she urged crypto firms not to give up on launching in the United States, but acknowledged that the SEC was behind in finding a regulatory solution.
Gary Gensler, the chair of the SEC, has previously called on crypto firms to engage with the regulator to avoid potential enforcement actions. The SEC has filed lawsuits against several crypto exchanges, including Binance and Coinbase, as well as other firms within the space.
The discord between Peirce’s dissenting opinion and the SEC’s actions highlights the challenges faced by the regulator in developing a clear and consistent regulatory framework for cryptocurrencies and blockchain technology. As the crypto industry continues to grow, it is crucial for regulators to strike a balance that encourages innovation while protecting investors and maintaining market integrity.
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