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SEC Reduces LBRY’s Fine From $22 Million To $111,000 After Revision of Punishment

The US Securities and Exchange Commission (SEC) has revised the initial punishment against a blockchain-based content provider, LBRY. 

It has significantly reduced the penalty from the previous $22 million to a revised amount of approximately $111,000.

SEC Revises Initial Penalty On LBRY

The decentralized content-sharing platform that utilizes blockchain technology found itself in legal trouble when the SEC alleged it conducted an unregistered securities offering.

The SEC filed a suit against the firm in March 2021, as the agency alleged that LBRY’s sale of digital tokens, LBC, qualified as the sale of unregistered securities.

Related Reading: Bitcoin Tweets Surpass Dogecoin Despite Meme Coin Craze

The case sparked a legal battle between LBRY and the SEC. The company contested this, arguing that their tokens were not securities and did not fall under the regulatory framework of traditional securities offerings.

However, the case turned out in favor of the SEC in November 2022, with the previous Judge ruling that the tokens were securities.

The regulatory body demanded a fine of $22 million as a penalty for the alleged violation and instructed the company to cease such offerings.

But LBRY stated in a December 2022 filing that the SEC’s request for $22 million was unrealistic given that the firm has not made such huge expenses in all its business dealings.

It noted that the agency’s deduction of the sum was simply rough math, and the record does not support the amount.

Furthermore, the agency realized the firm lacks adequate funds and may likely shut down its operations if it must pay such an amount. These became the major reasons for revising the initial punishment, according to information that came from a May 12 New Hampshire District Court filing.

SEC’s Crackdown On Cryptocurrencies

The SEC’s stance on digital assets can impact investors differently. If the SEC determines that certain digital assets fall under its definition of securities, it may impose trading restrictions on them. 

This means that investors may face hurdles in trading their favorite digital currencies as they must comply with additional regulatory requirements, such as using SEC-approved assets and platforms. 

These restrictions can limit the liquidity and accessibility of certain digital assets, making it more challenging for investors to engage in the market. This was evidenced in the Ripple case, as the SEC mandated all the crypto platforms in the US to delist XRP.

SEC Reduces LBRY's Fine From $22M To $111K After Revision of Punishment

However, the SEC’s regulatory approach also aims to protect investors. The regulator helps safeguard investors from fraudulent activities, scams, and market manipulations by enforcing regulations and scrutinizing digital asset offerings.

featured image from Pixabay and chart from Tradingview

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Bitcoin Hash Rate Goes On Death Spiral Post China’s Crackdown On Miners

The great Bitcoin miners migration is well underway. And the network’s total hash rate is showing it in a big way. Currently, the number of terahashes per second is at its lowest level in the last twelve months. That means that mining Bitcoin has not been easier in a whole year. Also, there’s less competition. So, it’s good news for all the other miners that are spread around the world. However, don’t expect it to last long.

Related Reading | How China Bitcoin FUD Is Lowering The Cost To Produce BTC

Tons and tons of mining equipment are currently traveling to their new homes. There are reports of a huge operation in Kazhakstan, a neighboring nation of China. There are also rumors of equipment and personnel already settling down in Texas. The US state is making a push to become a Bitcoin mining capital, and apparently, the efforts already bore fruit. 

Back in China, the crackdown is no longer a rumor. It’s a reality. CNBC reports:

China’s crackdown intensified over the weekend, with authorities in the hydropower-rich Chinese province of Sichuan ordering crypto miners to shut down operations.

According to reports, more than 90% of China’s bitcoin mining capacity is estimated to be closed. 

Some experts see this as a good thing. It’s estimated that China controlled between 60 and 70% of Bitcoin mining, and the future looks clearer with them out of the picture. The hash rate will suffer for a while, but there’ll be more decentralization. Also, the carbon-powered-energy consumption FUD will decrease. Even though China’s miners were mostly located in areas rich in renewable energy, Bitcoin critics had a hard time believing reports from that side of the world. 

Total Hash Rate (TH/s) of the Bitcoin network | Source: Blockchain.com

Another China Ban, A Reflection Of 2017

This is not the first time that the Chinese government’s cryptocurrency policy caused havoc on the market. In September 2017, they banned crypto exchanges altogether. Just before that, Bitcoinist reported:

While Chinese exchanges used to represent over 90% of Bitcoin’s trading volume, this changed completely with the intervention of the PBoC which led to the end of margin trading and zero-fee policies and to the temporary halt on withdrawals.

All of these changes contributed to China’s trading volume reduction, which saw its market share fall to 3-5% of the global trading volume.

So, historically, the Chinese government has shown no mercy in closing billion-dollar businesses by decree. It’s also worth noting that most of the banned cryptocurrency exchanges just closed their China offices and moved their operation to other countries. They continue working to this day and, for users not in China, the traumatic move didn’t affect their experience in the slightest. Bitcoinist reports again:

The clampdown led to a staggering drop in CNY trading — which comprised over 90 percent at its peak — as traders made an exodus to over-the-counter, peer-to-peer, and foreign exchanges. As a result, jurisdictions with friendlier laws experienced a boom in trading volume as the market flipped on its head

The current situation with the miners is a reflection of that. The mining business is in the process of flipping on its head. The hash rate will recover.

BTCUSD price chart for 06/25/2021 - TradingView

BTC price chart on Bitstamp | Source: BTC/USD on TradingView.com

The Hash Rate Will Rise Again

In retrospect, we should’ve seen it coming. Only two months ago, following a suspicious blackout, NewsBTC reported:

According to the Beijing Economic and Information Bureau, there were concerns about the energy consumption related to these activities. PengPai quotes Yu Jianing, rotating Chairman of the Blockchain Special Committee of China, to claim that the country’s environmental requirements could lead to crypto mining being more “strictly regulated”. Jianing said this will be “inevitable”.

Related Reading | Bitcoin Mining In China To Usher Historic Moment, Will BTC Be Affected?

As for the possible reasons, Bitcoin Magazine’s Lucas Nuzzi cites the upcoming Digital Yuan CBDC. He also defuses the FUD by informing us, “Daily Hash Rate is, by its very design, a volatile metric that is not suitable to track lasting changes in the mining landscape.”

We should also take into consideration Nic Carter’s assertion that all of these things are happening while, “Bitcoin continues to maintain 100% uptime, is nothing short of a modern marvel.”

In Bitcoin, everything’s changing while everything stays the same. The hash rate will rise again.

Featured Image by OpenClipart-Vectors from Pixabay - Charts by TradingView and Blockchain.com