Hester Peirce Dissents on SEC Lawsuit Against LBRY
Hester Peirce, a commissioner at the United States Securities and Exchange Commission (SEC), has expressed her disagreement with the regulator’s legal action against blockchain company LBRY. In a statement released on October 27, Peirce stated that she felt “unsettled” by the SEC’s enforcement action against LBRY in March 2021. A judge ruled in favor of the SEC in November 2022, determining that LBRY’s LBC token was a security. Despite LBRY’s appeal, the company recently announced plans to wind down due to significant debt resulting from legal costs.
Peirce Criticizes SEC’s Approach
Peirce criticized the SEC’s handling of the case against LBRY, stating that it was “puzzling” since there was no evidence of fraud and LBRY had taken a conservative approach to digital assets compared to other crypto projects. She argued that there was no clear process for projects like LBRY to register with the SEC and that it would not have been a useful effort even if they had tried. Peirce also highlighted the Commission’s disproportionate remedies, such as seeking $44 million in monetary remedies and dismissing LBRY’s offer to burn all tokens as insufficient assurance of compliance.
Some overdue thoughts on our case against LBRY: https://t.co/wLsG4Xr7wz
— Hester Peirce (@HesterPeirce) October 27, 2023
Impact on Innovation and Regulation
Peirce expressed concern about the consequences of the SEC’s actions, stating that the case against LBRY had forced entrepreneurs to abandon their work. She believed that the resources and time spent on this case could have been better utilized in building a regulatory framework that companies like LBRY could have followed, allowing the market to determine LBRY’s fate. Peirce also noted that the SEC’s approach would discourage experimentation with blockchain technology.
Gensler’s Call for Dialogue
The SEC Chair, Gary Gensler, has repeatedly urged crypto firms to engage with the regulator to avoid enforcement actions. The SEC has filed lawsuits against various crypto exchanges and companies in the industry, including Binance and Coinbase.
Hot Take: Peirce Advocates for Balanced Regulation to Foster Innovation
Hester Peirce’s dissenting opinion on the SEC’s lawsuit against LBRY highlights her belief in the need for a balanced regulatory approach that fosters innovation in the crypto industry. She argues that the SEC’s enforcement-driven actions in this case were arbitrary and disproportionate, leading to negative consequences for entrepreneurs and discouraging experimentation with blockchain technology. Peirce emphasizes the importance of creating a workable regulatory framework that provides clarity and allows companies like LBRY to operate within legal boundaries while enabling market forces to determine their success or failure. Her dissent serves as a reminder of the ongoing debate surrounding crypto regulation and its impact on innovation.
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