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Hester Peirce has expressed concern about the SEC’s approach to cryptocurrency enforcement, explicitly referencing the recent LBRY case.
Commissioner Hester Peirce of the Securities and Exchange Commission (SEC) on October 27 shared her thoughts on the agency’s treatment of the LBRY blockchain-based payments and file-sharing network.
In its statement, Peirce highlighted that the SEC had singled out LBRY despite having a functional blockchain with a real-world application. He condemned the Commission’s role in the demise of LBRY following the company’s closure after failing to crypto-ruling-favoring-sec” data-type=”link” data-id=”https://news.bloomberglaw.com/litigation/lbry-winding-down-drops-appeal-of-crypto-ruling-favoring-sec” target=”_blank” rel=”noreferrer noopener”>appeal the judicial decision that went against.
“Are investors and the market really better off now that the Commission’s litigation contributed to the demise of a company that had built a functional blockchain with a real-world application running on top of it?”
Hester Peirce, SEC Commissioner
He notary He said the SEC was misaligned with its “misguided enforcement-based approach to cryptocurrencies.” He also condemned the regulator for not having a clear path laid out for companies like LBRY to register functional token offerings.
He argued that the SEC could have used the time and resources invested in the LBRY case to create clear regulations that would benefit the crypto sector instead of this blind blame game.
Austin Campell, a professor at Columbia Business School, echoed Commissioner Pearce’s sentiments, describing the SEC’s conduct in the LBRY case as “tremendously egregious” and a “national scandal.”
According to him, the SEC had a problem with the way LBRY implemented its native token. The company did not register it as a security. The Commission took punitive action and demanded fines of $44 million, which Campbell considered strange because there were no accusations or evidence of fraud.
Ultimately, the court approved the fine but reduced it to $111,614. By then it was too late. The damage was done and LBRY was gone. technology/2023/jul/16/lbry-closes-odysee-cryptocurrency-tech-sec-fraud-extremist” target=”_blank” rel=”noreferrer noopener”>spoiled shortly after.
Campbell continued to strongly advocate for a complete overhaul of SEC leadership to allow for rules more tailored to innovations like blockchains rather than hindering them with what he considers outdated regulations.
