LBRY Files Notice of Appeal Against SEC

The blockchain-based file sharing platform now intends to appeal a ruling that it offered unregistered securities.

LBRY, the company behind the blockchain-based file sharing and payments network, appears to have switched gears after the recent victories of crypto firms against the U.S. Securities and Exchange Commission (SEC).

According to a Sept. 5 filing with the United States Court of Appeals for the First Circuit, LBRY intends to appeal the final judgment that ordered the firm to cease operations on the grounds that it had violated securities laws by offering unregistered securities.

LBRY has filed a Notice of Appeal against the SEC. pic.twitter.com/Zp9S0TP0Qw

— LBRY 🚀 (@LBRYcom) September 7, 2023

At the time of the ruling, LBRY was ordered to pay a $111,614 civil penalty – a revised figure imposed by the SEC, which initially sought a $22 million fine, but later cited the firm’s “lack of funds and near-defunct status” as the reason for the change.

“In accordance with the court’s order and our promises, we expect to spend the next several months winding LBRY Inc. down entirely,” said LBRY in an X post at the time.

The shutdown was anticipated much in advance, with the firm saying in December that it has beeen killed by legal fees and SEC debts. However, the move to appeal the final verdict suggests that the firm has renewed optimism in its chances to continue operations in the future, on the back of two consecutive victories of crypto firms against SEC enforcement actions. 

In July, a judge ruled partially in favor of Ripple, coming to the conclusion that XRP sales through exchanges did not qualify as a securities offering. Although the SEC is seeking to appeal that ruling, and the story is far from over, many industry watchers regarded the court victory as an important moment for the space. 

More recently, crypto investment firm Grayscale won a lawsuit against the SEC over the regulator’s denial of its bid to convert the Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund (ETF). The firm is now pushing for a meeting with the regulator in the hopes that it will speed up the process to launch a spot Bitcoin ETF.