Hester Peirce: SEC case against LBRY ‘unsettled me’

The lawsuit “illustrates the arbitrariness and real-life consequences of the commission’s misguided enforcement-driven approach to crypto,” Peirce says

article-image

SEC Commissioner Hester Peirce | Permissionless II by Blockworks

share

SEC Commissioner Hester Peirce is once again dissenting from a crypto-related decision made by the agency she helps lead.

Peirce, who has historically spoken out about her support for a spot bitcoin ETF and other facets of the crypto space, did not agree with the Securities and Exchange Commission’s decision to bring a case against LBRY, she said in a Friday statement. 

The SEC filed a lawsuit against the blockchain-based file-sharing network in March 2021 — accusing it of offering LBRY Credit tokens (LBC) without registering them as securities.

LBRY CEO Jeremy Kauffman previously expressed concern this decision could potentially endanger the entire US crypto industry, as it would establish a precedent that could classify “almost every cryptocurrency” as security.

“The commission has brought many troubling crypto enforcement actions, but the LBRY…case has especially unsettled me,” she noted.

Read more: SEC Crypto Enforcements on Track to Eclipse 2022

LBRY’s approach was “more conservative” than those other projects took, Pierce said, making the SEC’s action against the company “especially puzzling.” Monetary remedies sought by the SEC — originally amounting to $44 million — were “entirely out of proportion to any harm,” she added.

LBRY said last week it would cease operations, citing its legal defeat to the SEC.  

“Are investors and the market really better off now after the Commission’s litigation contributed to the demise of a company that had built a functioning blockchain with a real-world application running on top of it?” Peirce added in the statement. “This case illustrates the arbitrariness and real-life consequences of the Commission’s misguided enforcement-driven approach to crypto.”

A spokesperson for the SEC did not immediately return a request for comment. 

This isn’t the first time Peirce has spoken out against SEC opposition to the crypto segment. She said during a discussion with Florida International University law students in March that enforcement should only come after regulations are put in place.

Those comments came before the SEC sued Coinbase and Binance in the same week in June. Those cases, which both involve alleged securities violations, are ongoing. The crypto exchanges have denied wrongdoing. 

Peirce, in an interview with CNBC Monday, said she has believed for five years that the regulator should approve a spot bitcoin ETF — noting “the logic for why we haven’t [approved one] has always mystified me.”

The SEC commissioner put forward a safe harbor proposal in April 2021 that would give developers a grace period to experiment with decentralized networks while being exempted from certain federal securities laws.

“Our disproportionate reaction in this case will dissuade people from experimenting with blockchain technology, which LBRY aptly describes as ‘technology that enables dissent,’” Peirce said Friday. “A government of a free people should welcome dissent and the technologies that enable it.”


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2023

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Cover Vertex.jpg

Research

The proliferation of new perp DEXs has led to fragmented liquidity across various DEXs and chains. Vertex, known for its vertically-integrated DEX that includes spot, perpetual, and integrated money markets, is now tackling cross-chain liquidity fragmentation through horizontal integration with the launch of new Edge instances. Vertex's integrated offerings and cross-margined account structure amplify the benefits of new instances: native cross-chain spot trading, optimized cross-chain basis trading, consistent interest rates, reduced bridging friction, and more.

article-image

Plus, a dive into crypto’s ever-expanding unicorn club

article-image

Also, tokenization continues to grab headlines and one bitcoin miner stock soars Tuesday after inking a big deal

article-image

Fifteen million daily failed transactions disappeared from Solana

article-image

FTX debtors will pay the IRS $200M, with an outstanding lower priority claim of $685M

article-image

I’ve come to the realization that more attention is needed to create and sculpt the digital spaces where we live

article-image

The NYSE went down yesterday after a glitch caused a string of erroneous trades. Does DeFi fix this?