The SEC was hoping to seek affirmation on an ambiguous injunction after scoring a victory during a hearing in November 2022, but judges made it clear that the judgment was only for the direct sale. 2176 Total views 13 Total shares Listen to article 0:00 News Own this piece of history
Collect this article as an NFT The United States Securities and Exchange Commission (SEC) admitted on record that the sale of LBRY Credits (LBC) tokens in the secondary market doesnt constitute a security. The settlement came during an appeal hearing in the LBRY vs. SEC case on Jan. 30.
LBRY Hearing: The Stakes for ALL Crypto https://t.co/YPbrBkw0Od CryptoLaw (@CryptoLawUS) January 30, 2023
In what many called a victory for the entire crypto industry against the SECs overreach regulation by enforcement, Attorney John Deaton settled a major debate during the appeal hearing.
The SEC was awarded summary judgment in its favor during the Nov. 7, 2022 hearing. The judgment categorized each sale of the LBC token during a six-year period as an investment contract without going into detail about the transactions specifics. The SEC hoped to advance its effort to gain legitimacy in the secondary market and bring it under its purview as well. The SEC has asked the New Hampshire district court judge to affirm the wide, ambiguous injunction prohibiting its sale.
Deaton, who represented tech journalist Naomi Brockwell as an amicus curiae, sought clarity for LBC secondary market transactions because he found the injunction ambiguous and broad. An amicus curia is an individual or organization that is not a party to a legal case but is permitted to assist a court by offering information, expertise, or insight that has a bearing on the issues in the case.
Deaton cited a paper by commercial contract attorney Lewis Cohen that examined all security lawsuits in the U.S. since the SEC vs. W.J. Howey Co case. No court acknowledged that the underlying asset was security at any point throughout Cohens examination of security cases in the United States.
Related: The aftermath of LBRY: Consequences of cryptos ongoing regulatory process
Deaton persuaded the judge that LBCs secondary market transactions were not securities. The SEC requested an order that does not make a distinction between LBRY, the companys management, and users in an effort to avoid providing clarification for LBC. The judge turned to Deaton and told him: amicus, Im going to make it clear that my order does not apply to secondary market sales.
The ruling in the case came as a relief for 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 that indicates LBC token sale in the secondary market doesnt qualify as securities can work in favor of the long-running Ripple lawsuit. A pro-XRP Twitter account said the ruling makes XRP a non-security as well.
If the SEC admitted LBRY isnt a security then they know for sure that #XRP is definitely not a security XRPcryptowolf (@XRPcryptowolf) January 30, 2023
Another user suggested the recent ruling could force a settlement in the Ripple lawsuit and said:Thats going to kill the sec court case against XRP could this force a settlement?
Others laudedDeaton for his continuous work to fight against SECs overreach, as he has been actively involved in the Ripple lawsuit. #Security #Ripple #SEC #XRP #Regulation Related News The concept and future of decentralized Web3 domain names Genesis Capitals fall might transform crypto lending not bury it Sam Bankman-Frieds Alameda Research troubles predate FTX: Report SEC leaked crypto miners personal information during investigation: Report Ripple CEO: XRP lawsuit resolved by June, SEC conduct embarrassing
