SEC Settles Collateral Claim in LBRY Case; the community calls it a big win for crypto

[ad_1]

The United States Securities and Exchange Commission (SEC) has officially recognized that the sale of LBRY Credits (LBC) tokens in the secondary market does not constitute security. The settlement came at an appeal hearing in the LBRY v. SEC case on January 30.

LBRY Hearing: The Stakes for ALL Crypto https://t.co/YPbrBkw0Od

CryptoLaw (@CryptoLawUS) January 30, 2023

In what many have called a victory for the entire crypto industry against the SEC’s overregulation by law enforcement, attorney John Deaton settled a major debate during the SEC hearing. ‘call.

The SEC obtained summary judgment in its favor during the November 7, 2022 hearing. The judgment classified each sale of the LBC token over a six-year period as an investment contract without going into the details of the transaction details. The SEC hoped to continue its efforts to gain legitimacy in the secondary market and place it under its responsibility as well. The SEC asked the New Hampshire District Court judge to uphold the broad and ambiguous injunction prohibiting its sale.

Deaton, who was representing technology journalist Naomi Brockwell as an amicus curiae, sought to clarify LBC’s secondary market transactions as he found the injunction ambiguous and broad. An amicus curia is a person or organization who is not a party to a court case but who is authorized to assist a court by offering information, expertise or insight that bears on the issues in dispute.

Deaton cited an article by commercial contracts attorney Lewis Cohen who has reviewed all security lawsuits in the United States since the SEC case against WJ Howey Co. No court has recognized that the underlying asset underlying was security at any point in Cohens’ review of security affairs in the United States.

Related: The Consequences of LBRY: Implications of the Ongoing Crypto Regulatory Process

Deaton persuaded the judge that LBC’s secondary market trades were not securities. The SEC requested an order that does not distinguish between LBRY, company management and users in an effort to avoid providing clarification to LBC. The judge turned to Deaton and said, amicus, I will clarify that my order does not apply to secondary market sales.

The ruling in the case came as a relief to many in the crypto community, especially XRP holders. Ripple is currently facing a securities lawsuit from the SEC over the sale of XRP tokens. The recent ruling which indicates that the sale of LBC tokens on the secondary market is not permissible, as the securities may work in favor of the long-running Ripple lawsuit. A pro-XRP Twitter account said the decision also makes XRP unsafe.

If the SEC has admitted that LBRY is not a security, they know for sure that #XRP is definitely not a security.

XRPcryptowolf (@XRPcryptowolf) January 30, 2023

Another user suggested that the recent decision could force a settlement in the Ripple lawsuit and said:

This will kill the second lawsuit against XRP, could it force a settlement?

Others praised Deaton for his continued work to combat SEC overreach, as he was actively involved in the Ripple lawsuit.

[ad_2]