LBRY Token Plummets 18% as Firm Behind File-Sharing Project Shuts Down

A Federal Judge has ruled that LBRY, Inc, the company behind the LBRY protocol, is liable for violating U.S. securities laws–causing the LBRY token (LBC) to collapse by nearly 18% early today.

According to yesterday’s final judgment, the company is permanently restrained from offering unregistered securities unless it first registers with the U.S. Securities and Exchange Commission (SEC).

LBRY, Inc has also been fined $111,614 for which it has thirty days to pay.

The decentralized content-sharing project was quick to announce its next steps too.

“In accordance with the court’s order and our promises, we expect to spend the next several months winding LBRY Inc. down entirely,” said the team upon receiving the notice yesterday. “As to what happens to LBRY from here, well, that’s up to you.”

Despite the project’s announcement that it’s shuttering, it’s important to clarify that the SEC never sought a complete shutdown of the project–at least according to their initial complaint.

The agency aimed for the project to restrain from any sort of unregistered securities offerings, a return of “ill-gotten” profits from those activities, and civil penalties.

During the litigation process, the SEC pointed to explicit publications on LBRY’s website that it was offering LBC tokens to “financially support its operations,” both through their protocol and on secondary markets–which refer to buying and selling of tokens on platforms that aren’t the original issuers of the cryptocurrency.

Tuesday’s resolution didn’t reference sales on secondary markets, nor explicit labeling by the judge as to whether LBC is, in fact, a security.

In November last year, Judge Paul J. Barbadoro of the U.S. District Court of New Hampshire, ruled against the cryptocurrency project, deeming it could offer “no reasonable trier of fact that could reject the SEC’s claims,” which led LBRY to announce “We lost.”

Moments after yesterday’s resolution, company CEO, Jeremy Kauffman posted on Twitter: “All I’ve ever wanted to do is follow the law,” adding that “no one at the SEC, nor the federal judge himself, can tell me what the law allows and doesn’t allow.”

According to the team, the network has 30 million pieces of content, 1.7 million on-chain identities, quality open-source code, and big-name creators. LBRY also claimed it has the “clearest regulatory standing of any token other than BTC and ETH.”