The discontinuation of LBRY, a blockchain-based network facilitating file-sharing and payments, has been declared due to its outstanding financial obligations amounting to several million dollars. These debts encompass liabilities owed to the Securities and Exchange Commission (SEC), the company’s legal representatives, and a private creditor.
The blockchain company bid farewell to the crypto community on October 20th through its video-sharing platform called Odysee and X. In a heartfelt message, the firm expressed its inability to sustain operations any longer, attributing it to increasing financial obstacles. This final post served as their farewell to the community.
LBRY recently disclosed its insurmountable burden of debts in the millions to the SEC, its legal advisors, and a private creditor. Alas, the company’s financial circumstances had rendered it incapable of repayment.
LBRY has made it clear that a complete overhaul has taken place of its leadership. The entire executive team, staff, and board members have stepped down, showing their commitment to meeting all legal responsibilities. Additionally, LBRY emphasized that their valuable assets, including their prominent application Odysee, are now under the supervision and scrutiny of the financial regulator.
In light of the SEC’s legal battle, the company had previously announced its decision to halt operations. The SEC emerged victorious in November 2022 with a court ruling, further solidified by a definitive judgment in July. Additionally, the court required the company to pay the SEC a fine as compensation.
LBRY’s community was left stunned in September when news broke that LBRY had made the unprecedented decision to challenge a regulatory authority’s ruling, soon after encountering a legal setback. This unexpected action has sparked concerns regarding a potential shift in direction, particularly when reflecting on LBRY’s earlier statement issued just after the final verdict on July 11th.
LBRY’s public declaration, made after the initial ruling in July, confirmed their intention to comply with the court’s decision and gradually dissolve LBRY Inc. over the coming months. However, the subsequent appeal has sparked a change in LBRY’s position, fueling speculation and piquing the community’s curiosity.
SEC Lawsuit vs. LBRY: A Legal Triumph Amid Industry Challenges
In March 2021, the SEC took legal action against LBRY, alleging that the company had engaged in the sale of unregistered securities. These securities were purportedly offered to both institutional investors and platform users and span from the years 2016 to 2020.
The 1933 Securities Act claims that the LBRY Credit token (LBC), according to the SEC’s lawsuit, should be classified as a security. The SEC has been engaged in an examination of the blockchain-powered publishing platform for three years, instigating the investigation in May 2018.
LBRY, Inc. retaliated against the SEC’s allegation, contending that it could potentially harm the expansive cryptocurrency sector by labeling the majority of tokens as securities.
In November 2022, the SEC emerged victorious in the legal battle, as the presiding judge affirmed the classification of LBC (LBRY Credits) as a security.
At first, the SEC had demanded a combined sum of $44 million as a penalty, which was to be divided equally between a fine and disgorgement. Additionally, they sought a legal order to put a stop to any future sales of LBC.
Nevertheless, given LBRY’s precarious financial situation and near collapse, the SEC realized that expecting the full $22 million penalty payment was unrealistic. Consequently, they approached the court seeking a drastic reduction in the fine to a mere $111,614.
Despite the lack of evidence suggesting any wrongdoing or misrepresentation, the SEC’s actions targeting LBRY, a small American company, have drawn strong criticism from XRP lawyer John Deaton. Deaton expressed his disapproval, emphasizing that such actions have inflicted significant financial hardship on LBRY.
He stressed the significance of incorporating the LBRY case into law school curricula nationwide, not just for its applicability when evaluating modern blockchain and cryptocurrency technologies using the Howey Test, but also for its potential as a case that illustrates excessive regulation by the SEC.
Support Pours in from Crypto Community for LBRY Amid Regulatory Challenge and Closure
After hearing LBRY’s announcement on Odysee, the community displayed an unwavering dedication towards the support of Odysee and its blockchain network, showcasing their strong commitment.
Despite the obstacles faced by LBRY, the crypto community has shown unwavering strength, with numerous individuals stepping forward to openly reaffirm their backing for the LBRY team.
Upon the revelation, individuals within the cryptocurrency community have united in delivering their last expressions of encouragement to the LBRY team.
Steve, a member of the X community, conveyed his appreciation to LBRY for their relentless endeavors, possibly regarding their ongoing legal dispute with the SEC. Meanwhile, Archerships, another X user, lauded LBRY’s network as an exceptionally valuable platform built on blockchain technology.
Dome, a different user, expressed their appreciation, saying, You all were amazing! It’s unfortunate to witness the departure of one of the admirable individuals.
Furthermore, LBRY’s predicament was met with dissatisfaction from David Schwarz, Ripple’s Chief Technology Officer, who conveyed his disappointment through a GIF that accompanied the announcement.
Jeremy Kauffman, the former CEO of LBRY, expressed his thoughts on the company’s eight-year tenure in the cryptocurrency sector in a recent publication on X. He acknowledged that while it didn’t culminate in a joyous conclusion, the path they forged along the way was filled with contentment.
LBRY, once thriving, now questions its existence as operations come to a halt.
LBRY, a decentralized network that utilized blockchain technology for file-sharing and transaction processing, terminated its services as a result of sizable unresolved financial commitments. These liabilities extended to various entities such as the Securities and Exchange Commission (SEC), legal advisors, and a specific private creditor.
At what point in time did LBRY announce its discontinuation?
On October 20, 2023, LBRY made an official statement via their video-sharing platforms Odysee and X, declaring the termination of its services.
What was the extent of LBRY’s indebtedness and who were their creditors?
LBRY found itself tangled in a web of financial obligations worth millions, which it owed to various parties including the SEC, the legal advisors representing the company, and a private creditor.
Has LBRY made any attempts to resolve its financial troubles?
LBRY experienced a comprehensive restructuring of its leadership, as all members of the executive team, staff, and board gracefully resigned to fulfill their legal obligations.
How did LBRY handle its assets, including the Odysee application?
The SEC, suspected to be the financial watchdog, is now overseeing and closely monitoring LBRY’s precious resources, which encompass the Odysee app.