SEC's Hester Peirce Criticizes Harsh Legal Actions Against Crypto Firms
Summary:
Hester Peirce, a United States Securities and Exchange Commission (SEC) commissioner, disagreed with the regulator's legal action against blockchain company LBRY. In October 2021, Peirce articulated her discomfort at the SEC's lawsuit against LBRY, suggesting that SEC's punitive focus towards crypto has real-world consequences. After the SEC won its claim that LBRY's LBC token was a security, they sought $44 million in penalties, a figure Peirce criticized as disproportionate. Peirce called for the resources used in legal actions to be dedicated towards developing feasible regulatory frameworks for crypto firms, and warned that harsh actions could stunt blockchain innovation.
Hester Peirce, a commissioner at the United States Securities and Exchange Commission (SEC), has publicly disagreed with the agency's legal action against blockchain company LBRY. Peirce revealed in a statement on October 27 her discomfort with the SEC's proceeding against LBRY initiated in March 2021. A judge declared in November 2022 that LBRY's LBC token was a security, siding with the SEC, despite LBRY's appeal. Following this, LBRY declared its intention to shut down in October, citing escalating legal expenses pushing them into millions of dollars in debt.
Peirce criticized the lawsuit, highlighting it as an example of the harm caused by the SEC's heavy-handed approach to crypto regulation. Peirce contended that the lawsuit against LBRY was odd, considering that the firm had not committed fraud and was more cautious in its handling of digital assets than other crypto ventures. She also stated that the SEC had failed to provide a clear route for a project like LBRY to register, and even if they had, it would have been largely futile.
According to Peirce, the SEC's harsh stance was manifest when it sought $44 million in penalties after a summary judgment victory, despite LBRY's proposal to burn all possession tokens, claiming it wasn't convincing enough to ensure future compliance. Peirce argued that the sought penalty was extremely disproportionate to the potential damage.
Moreover, she pointed out, the SEC could have used time and resources invested in the lawsuit to develop a feasible regulatory framework which companies like LBRY could follow, allowing the market to determine the company's destiny. Peirce concluded that the SEC's overreaction forced innovators to abandon their projects, which in turn, will deter future experimentation with blockchain technology.
As a SECcommissioner, Peirce is known for frequently opposing the SEC on crypto related enforcement cases, and has been previously reported advising crypto firms not to give up on establishing their operations in the United States. Gary Gensler, the chairman of the SEC, urged crypto firms to approach the regulator to avoid legal action, and as of recently, has filed lawsuits against crypto exchanges, Binance and Coinbase and several others within the sector.
Published At
10/27/2023 9:41:25 PM
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