The US Securities and Exchange Commission (SEC) aims to reduce its $22 million punishment against decentralized content platform LBRY to around $111,000.
The commission submitted a request for amendments to the New Hampshire District Court on Friday, claiming that the platform is not likely to be able to shell out the million-dollar penalty.
Instead of the initial $22 million, the SEC has asked the court to impose a fine of $111,614, citing LBRY’s “lack of funds and near-defunct status.”
“The Commission acknowledges LBRY’s representations that it is defunct, ceasing operations, and without the funds to pay a larger fine, and recognizes that a defendant’s ability to pay is a factor when imposing a civil penalty.”
The agency also asked LBRY to stop “conducting future unregistered offerings of crypto asset securities.”
The US regulator filed a civil lawsuit against LBRY in March 2021, alleging that the platform conducted an unregistered sale of its token LBRY Credits (LBC) and gained $22 million in the process.
In November last year, the SEC won the case and ruled that LBRY’s token LBC is deemed a security, subject to US securities laws.
At the time, the ruling said the blockchain publishing company did not have “a triable defense that it lacked fair notice” from the SEC.
“Because no reasonable trier of fact could reject the SEC’s contention that LBRY offered LBC as a security, and LBRY does not have a triable defense that it lacked fair notice, the SEC is entitled to judgment,” the ruling, written by U.S. District Judge Paul J. Barbado, said.
LBRY, on its side, had argued that the LBC token is not a security, calling it instead “a digital currency that is an essential component of the LBRY Blockchain.”
LBRY Called SEC’s Ruling Unreasonable
Last year, LBRY said in a filing that the SEC’s request for $22 million wasn’t reasonable, as it was “vastly” overstated and failed to “deduct any of LBRY’s legitimate business expenses.”
The blockchain platform claimed the commission miscalculated the sum, saying that its estimation was “based on rough, back-of-the-envelope math” and the amount it sought was “simply not supported by the record.”
LBRY also expressed concerns about its financial viability, stating that it is likely to face financial ruin due to mounting legal and SEC debts.
Launched in 2018, LBRY is a decentralized network that seeks to simplify the way content is distributed and accessed by consumers.
The network’s LBC token has a market capitalization of just $6.6 million, making it a micro-cap token by global standards, according to data from CoinGecko.
The token, currently trading at around $0.0102, hit an all-time high or $1.60 in July 2016.