On Friday, SEC Commissioner Heister Peirce once again publicly criticized the policy pursued by her own agency. This time, it echoes a complaint against the LBRY project in 2021, which led to the termination of the company operating the blockchain last week.
Commissioner Heister Peirce criticizes SEC policy
Over the past few months, Heister Peirce, one of the 5 commissioners of the Securities and Exchange Commission (SEC), has made a name for herself by repeatedly going against the grain of chairman Gary Gensler’s aggressive approach to cryptocurrencies.
On Friday, the interested party published a testimony on the SEC website, to denounce the “extremely harsh approach” the agency had taken in one of the many cases against the blockchain ecosystem: LBRY.
Initiated in March 2021, this case involving “the sale of unregistered securities” reached its conclusion last week, triggering the termination of LBRY Inc. the company operating a decentralized social network blockchain:
LBRY Inc. is winding down.
The LBRY network is unaffected.
Odysee and other assets will undergo a legal process to satisfy debts, but Odysee has a bright future ahead.
Thank you to everyone who fought with us for online freedom.
A final goodbye post is in the first reply.
– LBRY (@LBRYcom) October 19, 2023
Heister Peirce explains that if she hadn’t spoken out earlier on the subject, it was because her position as commissioner prohibited her from doing so. But now that the trial is over, she has no hesitation in criticizing the SEC’s policy:
“Are investors and the market really better off today after the Commission’s litigation contributed to the demise of a company that had built a working blockchain with a real-world application running on it? This case illustrates the arbitrary nature and real consequences of the Commission’s misguided approach to crypto. “
While not questioning the failure to comply with securities laws, it does condemn the disproportionate nature of the case, such as a demand for $44 million in pecuniary relief, nevertheless reduced in a second stage to just over $110,000.
Lack of clarity once again highlighted
Once again, Heister Peirce points to the lack of clarity in the SEC registration process, echoing similar criticisms already relayed in the past by players such as Coinbase:
“The application of securities laws to proposed tokens is unclear, despite the Commission’s continued claims to the contrary. There is no way for a company like LBRY to enter and register its functional token offering. “
Furthermore, while the Commissioner considers it easy to find fraudulent crypto projects, she believes this “sad reality” supports a “particularly puzzling” SEC decision in the case of the complaint against LBRY.
We should also point out that the teams behind this blockchain had, at the time, made comments that make particular sense today, given the actions of the American financial watchdog since:
“Classifying all tokens as securities will be a bureaucratic nightmare for U.S. residents and companies operating in the U.S. “
As Gary Gensler’s policies are increasingly called into question, we can see that the criticism is now even coming from his inner circle, despite the fact that he only took office a month after the complaint against LBRY.