- Decentralized content platform LBRY Inc. to wind down operations following a court order.
- The court ruling does not address the security status of the secondary sale of LBRY Credits (LBC).
- LBRY hints at possible asset sale amid wind-down plan.
LBRY Inc., the New Hampshire software company known for its decentralized content platform, announced on Tuesday that it will be winding down its operations in accordance with a court order.
The decision comes after a final judgment was delivered in the Securities and Exchange Commission (SEC) case against LBRY. However, the court did not provide a definitive ruling regarding whether the secondary sale of the company’s crypto asset, LBRY Credits (LBC), can be classified as a security.
The specifics of LBRY’s wind-down plan remain unclear at this time. The company stated, “As to what happens to LBRY from here, well, that’s up to you,” suggesting that the future of the platform will depend on the actions of its users. While no bankruptcy filing has been made, LBRY hinted at a possible asset sale in a tweet posted on the same day.
Judge Peter Barbadoro of the U.S. District Court for the District of New Hampshire, in his ruling on the case, did not definitively address whether the secondary sale of LBC could be considered a security. He stated, “Accordingly, I take no position on whether the registration requirement applies to secondary market offerings of LBC.”
The SEC’s complaint against LBRY accused the company of conducting an unregistered offering and sale of crypto asset securities, violating the Securities Act. The regulatory agency sought injunctive relief, disgorgement, and a civil penalty.
LBRY had argued against the necessity of an injunction, claiming that it planned to dissolve the company as soon as possible and dispose of its store LBC. However, Judge Barbadoro expressed concern about potential future violations, stating, “LBRY has not yet taken either action. In any event, I cannot rule out the possibility of future violations.” It’s worth noting that the judge did not extend the injunction to LBRY subsidiary Odysee, which operates the video platform.
In the final judgment issued on July 11, 2023, the court granted the SEC’s motion for an injunction and a civil penalty against LBRY. The company has been ordered to pay $111,614 and has been restrained from participating in unregistered offerings of crypto asset securities in the future.
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