LBRY is in the SEC’s firing line for selling unregistered securities. It claims the case could set a precedent that would affect much of the industry.
Blockchain company LBRY, Inc. has hit back at the Securities and Exchange Commission, saying a complaint filed against it threatens much of the crypto industry because it would define most tokens as securities.
The SEC has been looking into the blockchain-based publishing platform LBRY, Inc. as part of a three-year investigation that started in May 2018.
According to the complaint filed by the SEC, the platform is alleged to have sold unregistered securities across multiple avenues including to institutional investors and platform users between 2016 and 2020.
The regulator is seeking a permanent injunction to prevent the company from selling more tokens, disgorgement of all funds received with interest, and to pay an undisclosed amount in civil penalties.
LBRY developed a decentralized video sharing platform called Odysee that allows viewers to “earn cryptocurrency for watching videos” and for creators to earn LBRY Credits for their work. Since 2016, 13 million LBC tokens were sold for $5 million in Bitcoin. A press release from the SEC states the total amount raised was $11 million, including USD and services from purchasers who participated in its offering.
According to LBRY, while it did not conduct an initial coin offering (ICO) and the SEC is not alleging fraud, its attempts to settle have been rejected by the Commission:
“The SEC declined to offer any terms that would have made it viable for U.S. citizens to exchange tokens or to allow LBRY Inc to continue to operate. We were willing to give them a pound of flesh, but they were only interested in our head.”
Despite already spending “more than $1 million on legal fees” and the momentous effort of “several thousand hours of team members’ time” during the investigation, the company is not backing down, stating: “The SEC is advancing an aggressive and disastrous new standard that would make almost all blockchain tokens securities.”
“Classifying all actively-developed blockchain tokens as securities will be a bureaucratic nightmare for United States residents and businesses operating in the US.”
A petition on its website “helplbrysavecrypto.com” with more than 6,700 signatures to date calls on “the SEC to drop this case and establish clear standards for the cryptocurrency industry in the United States.”
HELP US SAVE CRYPTO IN THE USA
The entire future of crypto in US is at risk.
— Odysee (@OdyseeTeam) March 29, 2021
LBRY claims that when it asked the SEC how it could operate legally, it was told that the regulatory body could not advise on that and could only say that they were breaking the law.
However the firm stated that should the SEC succeed in shutting down LBRY, Inc., the LBRY platform and ecosystem will remain unaffected as it is fully decentralized with “hundreds of people across six continents,” most of which are not LBRY employees, contributing to the network in 2020.
The announcement ArtStation was launching NFT artworks did not sit well with the platform’s artists, who called for a boycott and threatened to leave the platform.
Prominent online art portfolio platform ArtStation has caved in to pressure from artists and environmentally-conscious users hours after announcing a series of non-fungible token, or NFT, drops from several notable artists.
On Mar. 9, the platform announced the program was scheduled to begin today and featured works from artists including Halo Infinite art director Nicolas “Sparth” Bouvier, retired NASA astronaut Nicole Stott, Assassin’s Creed franchise art director Raphael Lacoste, painter Craig Mullins, and Magic: The Gathering illustrator Alena Aenami.
Following a furious bombardment of criticism, all mentions of the announcement were pulled down and replaced with a short message on the website stating that “In light of the critical reception on social media regarding NFTs, it’s clear that now is not the right time for NFTs on ArtStation.” Despite the setback, the firm didn’t shy entirely away from the technology, hinting at its potential future use:
“We are very sorry for all the negative emotions this has caused. Despite our attempts to validate our approach, we clearly made a mistake and admit fault. It was our bad. We feel that NFTs are a transformative technology that can make significant, positive change for digital artists.”
Dapper Labs founder and CEO Roham Gharegozlou stated the decision to cave in was “short-sighted” adding that “for one, blocks will get mined anyway — for the other, the criticism basically doesn’t apply to proof of stake blockchains like Flow Blockchain [used by NBA Top Shot].”
Woo hoo, we bullied ArtStation into not selling NFTs! https://t.co/rZb3LnVUC0
— Michael Klamerus (@MichaelKlamerus) March 9, 2021
ArtStation’s original plan appeared to use the ERC-721 token on Ethereum which remains a power hungry Proof of Work blockchain until most transactions move to the more efficient Proof of Stake blockchain Eth2. It is unclear if the platform considered other blockchains that can host NFTs using a fraction of the power.
This apology only appeased some of the community, however, with artists like Ashley Grace taking to Twitter again to voice their concerns about the apparent inconclusive wording of the post, likening NFTs to an “ecological nightmare pyramid scheme.”
glad to see the backpedaling (lmao), but the “now is not the right time” obviously means you still want to do it, just not right now while everyone is freshly pissed off. just don’t? do it at all??? no one wants to be tokens in a goddamn ecological nightmare pyramid scheme https://t.co/MAYIPPDntP
— Ashley Grace / previously a.g.irish (@willowsquest) March 9, 2021
Prior to pulling down the initial announcement, ArtStation unsuccessful attempted to placate the push-back, adding that it will be “contributing to offset the carbon footprint costs of any given piece of digital art transacted on the platform.”
Twitter user “Bleached Rainbows” stated that “ArtStation going into NFT and saying ‘but don’t worry! We’ll pay for carbon offsets’ is the equivalent of setting a house on fire then placing a single potted plant on the burned property as ‘compensation’.”
The backlash came on top of other controversies including rumored sexism and adult content, with artists threatening to cancel their subscriptions. Other issues included the unregulated nature of the NFT space and ability for scams to arise, and criticisms the move was a cash grab for the platform and most prominent artists.
If the completely unmonitored front page, the rampant sexist bullshit, and the literal porn on what’s supposed to be a professional portfolio website wasn’t enough, now we have this
I’m canceling my sub, and Artstation can eat it pic.twitter.com/IZVTeHEqtn
— Xavier (@xavierck3d) March 8, 2021
Despite the intense controversy, NFTs continue to garner widespread support with Beeple’s Everydays: The First 5000 Days auction on Christie’s heating up. Kinetic founder Jehan Chu attempted to join but was outbid at $7.25 million with 2 days still to go.
— Jehan Chu (@collectionist) March 9, 2021
The highest bid is currently $9.75 million.
Nine hours after ArtStation canceled the NFT launch, NFL tight end for the Tampa Bay Buccaneers Rob Gronkowski announced his new NFT collection of four cards to represent his four championships. The cards will be sold at auction via Opensea on Mar. 10.
The limited-edition NFT artworks are already selling for thousands more than the original price. They combine work from 100 unique artists who might not have entered the space on their own.
An NFT made up of 100 individual pieces from 100 different artists has sold out within minutes on the Rarible platform, raising almost $89,000.
The Ultimate Artist Collaboration…
crashed Rarible and then sold out in minutes
— Loopify ♂️ (@Loopifyyy) March 3, 2021
Although the sale amount is far from record-breaking, the project is noteworthy in that it is a mass collaboration th has taken shape through an individual non-fungible token, or NFT.
NFT curator “Loopify” told Cointelegraph the work had been inspired by the current limitations for lesser-known artists to mint and sell their own NFTs such as high gas fees, limited understanding of the tech, and little visibility.
“The main idea behind it was that I chose a lot of artists and they had a huge barrier [minting fees] — this allows them to pursue creating NFTs.”
Minted on NFT platform Rarible, Loopify originally listed 150 editions for 0.3 ETH (approximately $475) each on March 3. Less than 24 hours later the editions have already risen in value by almost 7X, and are changing hands for 2 ETH, with the most expensive edition currently listed at 4 ETH by “Artist.” That’s more than 13 times the original price.
While the identities of all 100 artists are yet to be revealed, Loopify told Cointelegraph that the compilation includes work from Vexx, whose YouTube channel has almost three million subscribers and a quarter of a billion views, adding:
“We do have a couple of big artists and one that is new to NFTs”
The funds raised will be transferred into stablecoin USDC before being distributed equally to the artists. This process allows artists to enter the space and reap the rewards without having to pay gas fees or understand the technology behind NFTs Loopify explained.
Enjin running faster
Enjin, whose team created the ERC-1155 token, or semi-fungible token, is also tackling the gas fee barrier for incoming NFT artists. The project has just announced plans to release a new scaling solution dubbed JumpNet that will use the ERC-1155 token to allow users to mint and port tokens on multiple chains without gas fees.
Enjin CTO Witek Rodmoski explained that, “These technologies will enable developers to reach mainstream users and provide modern experiences without worrying about unpredictable business overhead caused by gas fees,” adding:
“JumpNet is our high-speed bridge network that will allow creators to mass-distribute thousands of NFTs at no cost. Tokens on JumpNet can jump between the Ethereum network or Efinity (our upcoming NFT highway) when it launches later this year.”
Although phase one is due to launch on April 6 and will support the free minting and trading of NFTs on Ethereum, it will not be until the second phase Efinity before the solution will support “assets from *any* blockchain.”
Interest in NFTs has snowballed this week, with Banksy, Grimes, Paris Hilton, and Deadmau5 getting in on the act.
The fiasco surrounding the legal status of Ripple’s cryptocurrency XRP continues to unfold as a new lawsuit filed against MoneyGram puts pressure on the case. MoneyGram, presently the world’s second-biggest money transfer service provider, is being sued for allegedly making false statements regarding its relationship with Ripple and also for failing to reveal that XRP […]