The US Securities and Exchange Commission (SEC) has reduced a $22 million fine for file sharing and payment protocol LBRY to just $111,614.
LBRY lost a lawsuit with the SEC last November after a federal judge ruled that the company violated securities laws when it raised about $12.2 million in proceeds from the sale of its proprietary token, LBC.
The SEC initially asked LBRY for $22 million, but the company countered that amount in a December appeal, claiming the number represented a massive overestimate of the proceeds it earned from the sale of LBC.
The SEC is now asking in a new memorandum that the court simply impose a $111,614 civil fine on LBRY, without any refund.
“Notwithstanding the availability of a refund as a remedy in this case, in consideration of the information and affidavits received during the additional discovery period, the Commission withdraws its request for a refund due to the lack of resources of LBRY (including its wholly owned subsidiary) and near-defunct status.”
The SEC is also asking the court to issue an injunction barring LBRY from violating Section 5 of the Securities Act of 1933 and conducting unregistered offerings of crypto-asset securities.
The company says it does not need the injunction because it is already winding down its business and plans to burn its current LBC holdings. However, the SEC notes that LBRY has yet to do any of these things.
“That is why LBRY should be imposed, at least until LBRY dissolves and burns its LBC. The alternative approach – not imposing LBRY unless it fails to decompose and burn its tokens – puts this court and the Commission in the hard-to-manage position of having to oversee LBRY’s activities, and requires that an currently dissolved LBRY proves to the court that its LBC property has been destroyed and it no longer exists. In addition, the time before LBRY is dissolved may prove to be the time of greatest risk of further breaches – a cash-strapped defendant who knows that it will cease to exist as a legal entity may have a sense of impunity and may be more inclined to violate law. the securities laws during that time.”
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