• The US Securities and Exchange Commission (SEC) recently won a case against LBRY Credits, ruling that the LBC token was an investment contract.
• However, in a recent win for the LBRY community, the judge clarified that the ruling did not include secondary market sales.
• This judgment could work in favor of Ripple, as the XRP community has come out to say that the ruling meant that XRP was also a non-security.
The SEC’s Case Against LBRY Credits
The US Securities and Exchange Commission (SEC) filed a lawsuit against LBRY Credits in November 2020, claiming that its LBC token was an unregistered security. The SEC argued that company management had engaged in selling unregistered securities by offering the token for sale to investors without first registering it with regulators.
LBRY Credits Wins Against SEC
Attorney John Deaton argued before the district court judge for New Hampshire that previous lawsuits filed by the SEC failed to differentiate between company management, users and tokens. After hearing Deaton’s argument, the judge ruled that the order given in November did not apply to secondary market sales. This meant that any sale of LBC tokens on secondary markets would not be considered as securities under US law.
Impact On XRP Community
The SEC has also taken similar action against Ripple and its executives over claims of unregistered securities offerings of its XRP token. The recent ruling in favor of LBRY reignited hope among members of the XRP community who believe this could force the regulator into settling with Ripple as well. Many have said that this judgment could work in favor of Ripple, as it implies that XRP is also a non-security under US law.
Reactions To The Ruling
The news was met with great excitement from both communities involved – those from LBRY and those from Ripple/XRP. Members from both camps have praised John Deaton for his successful argument before the court and thanked him for fighting their respective battles so fervently and successfully. There have been calls for other crypto projects facing similar legal predicaments to follow suit and hire attorneys like Deaton who can make effective arguments before courts on their behalf.
This landmark case from LBRY vs SEC brings much needed clarity regarding regulations surrounding cryptocurrency assets such as tokens being issued through ICOs or digital asset exchanges like EtherDelta or Binance DEXs . It further demonstrates how important it is to have knowledgeable legal representatives fighting your corner when dealing with regulatory bodies such as the SEC; something all crypto projects should consider doing if they are ever faced with similar situations where regulation is concerned