Hester Peirce, a commissioner at the United States Securities and Exchange Commission (SEC), has expressed her disagreement with the regulator’s lawsuit against blockchain firm LBRY. In a statement issued on October 27, Peirce revealed that she felt “unsettled” by the SEC’s enforcement action against LBRY earlier in the year. Despite LBRY appealing the court’s decision that its LBC token was a security, the company recently announced its plans to wind down due to the heavy debt incurred from legal costs.
Peirce criticized the SEC’s approach to cryptocurrency enforcement, describing it as “misguided” and arguing that the LBRY case demonstrated its arbitrariness and real-life consequences. She pointed out that LBRY had shown no evidence of fraud and had taken a more cautious approach to digital assets compared to other crypto projects. Peirce suggested that the lack of clarity on how projects like LBRY could register with the SEC made it a futile effort for them to do so.
Peirce highlighted the Commission’s excessively strict stance in this case, citing its pursuit of monetary remedies amounting to $44 million, even after winning on summary judgment. She also noted that the SEC considered LBRY’s offer to burn all its tokens as insufficient assurance that the company would not violate registration provisions in the future. Peirce argued that the requested remedies were disproportionate to any harm caused.
According to Peirce, the time and resources spent on the LBRY case could have been better utilized in developing a workable regulatory framework that would have allowed companies like LBRY to operate. She believed that allowing the market to decide LBRY’s fate would have been a more reasonable approach.
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Peirce expressed her concern that the SEC’s action had forced a group of entrepreneurs to abandon their project. She believed that the Commission’s disproportionate reaction in this case would deter people from experimenting with blockchain technology and hinder innovation in the industry.
This dissenting viewpoint from Peirce is not the first time she has disagreed with the SEC in crypto-related cases. In a previous interview with Cointelegraph, Peirce urged crypto firms not to give up on launching in the United States but criticized the Commission for being “far behind” in finding a regulatory solution.
In contrast, SEC Chairman Gary Gensler has called on crypto firms to engage with the regulator and have a dialogue to avoid potential enforcement actions. The SEC has already filed lawsuits against prominent crypto exchanges, such as Binance and Coinbase, and numerous other blockchain companies.
Peirce’s stance reflects the ongoing debate within the SEC and the wider regulatory community about how to effectively regulate and foster innovation in the cryptocurrency industry. While Gensler emphasizes the need for regulatory oversight, Peirce believes that a more flexible and balanced approach is necessary to encourage entrepreneurial growth and technological advancement.
As the crypto industry continues to evolve, it is crucial for regulators like the SEC to strike a delicate balance between investor protection and innovation. The outcome of the LBRY case and other similar cases will shape the future of crypto regulation in the United States and potentially influence global regulatory trends.
