The SEC commissioner criticized the regulator’s actions after LBRY announced the closure of operations in October.
The commissioner of the United States Securities and Exchange Commission (SEC), Hester Peirce has expressed an opposing opinion on the regulator’s lawsuit against blockchain firm LBRY, stating that they “forced a group of entrepreneurs to abandon what they built.”
In November 2022, a judge ruled that LBRY’s LBC token was a security, following the SEC’s position. LBRY appealed the decision, but later announced it would wind down due to financial hardship caused by legal costs. After their court case, Peirce in an October 27 statement described feeling uncomfortable with the SEC’s enforcement action against LBRY in March 2021.
“This case illustrates the arbitrariness and real-life consequences of the Commission’s misguided enforcement-driven approach to crypto,” said Peirce.
According to Peirce, there was no evidence of fraud against LBRY, and the company took a more risk-averse approach to digital assets compared to other crypto projects. Commissioner Peirce said that LBRY’s situation demonstrated the lack of a clear path for projects to register with the SEC, and that even if LBRY had registered, it would have been of limited value.
Peirce, criticized the SEC’s hardline approach in the LBRY case, calling the monetary remedies sought ‘out of proportion to any harm’ and stating that LBRY’s offer to burn all tokens was not considered sufficient.
Commissioner Peirce has frequently dissented from the SEC’s crypto enforcement actions, emphasizing that crypto firms should not give up on the U.S. market. However, she believes the SEC is lagging behind in developing a comprehensive regulatory framework.
Meanwhile, SEC Chair Gensler has invited crypto firms to “come in and talk” to avoid enforcement, but the SEC has filed lawsuits against major exchanges such as Binance and Coinbase.
Ripple and XRP executives back Commissioner Peirce
Following the news of Commissioner Peirce’s dissent in the SEC’s lawsuit against LBRY, members of the XRP community and a senior executive at Ripple, the company behind the XRP cryptocurrency, expressed their support for Peirce’s position.
Peirce has been a consistent advocate for clearer and more reasonable crypto regulation, and many in the crypto community have praised her for taking a more measured approach than some of her colleagues at the SEC.
Stuart Alderoty, the chief legal officer of Ripple Labs, and the XRP community have voiced their support for SEC Commissioner Peirce’s stance against the perceived “injustice” in the LBRY lawsuit. Alderoty suggested that it may be necessary to raise concerns more vocally and promptly when ongoing injustices occur in non-fraud cases, especially when consumers are still awaiting resolution in fraud cases.