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.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

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

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates (6).png

Research

In recent months, a number of highly accretive developments were implemented across the protocol to improve fee capture, expand product functionality, and ultimately drive value accrual to the RUNE token, with more upgrades on the immediate horizon. These developments include hiking the minimum swap fee parameter to increase revenue, adding a Burn System Income Lever to reduce the RUNE supply, the addition of COSM-WASM smart contracting and IBC to enable an application layer, new chain integrations, and more.

article-image

Blockworks Advisory helps protocols coordinate their launch and growth through white-glove, bespoke services

article-image

The app has just two tabs, one for making swaps and one for viewing your wallet balance

article-image

Delta comes out of stealth with $11 million in funding, and some novel ideas

article-image

HBO documentary Money Electric presents a fun theory that sadly falls flat

article-image

Has Satoshi Nakamoto been here the whole time, working on Bitcoin Core?