Sale of LBRY Credits tokens is not securities-SEC
2023.01.31 12:17
Sale of LBRY Credits tokens is not securities-SEC
By Tiffany Smith
Budrigannews.com – The secondary market sale of LBRY Credits (LBC) tokens does not constitute a security, as acknowledged in writing by the Securities and Exchange Commission (SEC) of the United States. On January 30, an appeal hearing in the LBRY v. SEC case resulted in the settlement.
Attorney John Deaton settled a major argument during the appeal hearing, which was hailed by many as a victory for the crypto industry as a whole against the SEC’s excessive enforcement regulation.
During the hearing on November 7, 2022, the SEC received summary judgment in its favor. Without going into specifics about the particulars of the transactions, the judgment categorized each sale of the LBC token that occurred over the course of six years as an investment contract.
The SEC hoped to expand on its efforts to legitimize the secondary market and include it in its jurisdiction. The broad and ambiguous injunction against its sale has been requested by the SEC and confirmed by the judge of the New Hampshire district court.
Deaton, who served as an amicus curiae for tech journalist Naomi Brockwell, wanted to clarify LBC secondary market transactions because he thought the injunction was vague and broad. An amicus curia is a person or organization that is not a party to a legal case but is allowed to help the court by providing information, expertise, or insight that is relevant to the case’s issues.
Deaton referred to a paper written by commercial contract attorney Lewis Cohen that looked at every security lawsuit filed in the United States since the SEC vs. W.J. Howey Co. case. Throughout Cohen’s analysis of security cases in the United States, no court acknowledged that the underlying asset was security.
The judge was persuaded by Deaton that LBC’s transactions in the secondary market were not securities. In an effort to avoid providing clarification for LBC, the SEC requested an order that does not distinguish between users, management, or LBRY. The judge told Deaton, turning to him: Amicus, I’m going to stress that my order does not apply to sales in the secondary market.
Many members of the crypto community, particularly holders of XRP, felt relieved by the case’s outcome. Due to the sale of XRP tokens, Ripple is currently the subject of a securities lawsuit from the SEC.
The recent decision that the sale of LBC tokens on the secondary market does not count as securities may benefit the ongoing Ripple lawsuit. According to a Twitter account in support of XRP, the decision also renders XRP non-secure.
If the SEC acknowledged that LBRY is not a security, then they are certain that XRP is not a security.
A different user commented, “The recent ruling may force a settlement in the Ripple lawsuit.”
“That will end the secret court case against XRP. Could this lead to a settlement?”
Others praised Deaton for his constant work to battle against SEC’s impropriety, as he has been effectively engaged with the Wave claim.
