SEC Sues Crypto-Based Online Publisher, Alleging Unregistered Securities

The complaint, filed in the District of New Hampshire, targets a decentralized publishing platform called LBRY. The SEC alleges that LBRY Inc. sold millions of dollars worth of what the Commission characterizes as unregistered securities by way of its “LBRY Credits,” through two online digital trading platforms. On its website, LBRY describes itself as “a new protocol that allows anyone to build apps that interact with digital content on the LBRY network. Apps built using the protocol allow creators to upload their work to the LBRY…” The network includes video, music, writing and other content uploaded by users. What the Commission alleges is that the company sold LBRY credits to the public “in exchange for contributions designed to allow LBRY to build the LBRY Network,” while claiming the augmented library storehouse would causes the price of the credits to appreciate, in violation of Section 5(a) and 5(c) of the Securities Act. Posting on its website, the company has called SEC’s characterization of LBRY Credits as unregistered securities “a tremendous threat to the entire cryptocurrency industry.”