LBRY Hopes to Copy Ripple: Appeals SEC Decision Labeling $LBC Token a Security
LBRY desided to fight back SEC
- LBRY appealed against a recent SEC decision that determined LBC was an unregistered securities.
- SEC’s decision in the LBRY case has been compared to continuing lawsuits against Ripple Labs.
- Although an uncertain outcome, LBRY appeal might impact cryptocurrencies regulations in the US.
LBRY, a blockchain-powered network for file-sharing and payments, seems to be changing its course. Instead of winding down as initially planned, it’s now challenging a federal judge’s decision from July that favored the Securities and Exchange Commission, following Ripple’s lead.
LBRY filed an appeal with the United States Court of Appeals for the First Circuit. They aim to contest the July 11 final ruling that imposed fines and prohibited the company from engaging in future unregistered offerings of crypto asset securities.
It said :
“Defendant LBRY, Inc. now appeals to the United States Court of Appeals for the First Circuit this Court’s final judgment entered on July 11, 2023.”
LBRY’s CEO Jeremy Kauffman told CCN that LBRY decided to appeal the SEC’s decision because it is “unjust and incorrect”.
“The SEC has shown clear intent to use this ruling to damage the cryptocurrency industry more broadly. We won’t let them,” he stated.
A SEC’s Legal Battle Against LBRY Overview
In March 2021, the SEC filed a lawsuit against LBRY , Inc., alleging that the developer offered its LBRY Credit token (LBC) as a security in violation of the 1933 Securities Act.
On Nov. 7, the U.S. District Court for the District of New Hampshire approved the SEC’s move for summary judgment against LBRY, prohibiting the platform from marketing “unregistered crypto asset securities” and directing it to pay the SEC $111,614 in fines.
The regulator initially demanded a $22 million fine, but altered direction after admitting the defunct company couldn’t afford it.
The company appeared to acknowledge this after the ruling in July by tweeting :
“We expect to spend the next few months completely winding LBRY Inc. down, in accordance with the court’s order and our promises,” the statement continued.
The SEC’s win against LBRY has renewed interest in its major case against Ripple Labs. While both LBRY and Ripple initially opted for angel funding over Initial Coin Offerings, their legal arguments in court differ significantly.
It is still unknown how the outcome of the LBRY case might affect the Ripple case because these two matters are handled by distinct legal systems.
The CEO of LBRY, Jeremy Kauffman, said that the decision might be fatal for the majority of cryptocurrencies with U.S. origins.
Aaron Kaplan, co-CEO of Prometheum exchange, expresses the same concern, suggesting that regulators could now categorize nearly all tokens, except Bitcoin, as securities. Australian attorney Bill Morgan echoed LBRY’s sentiments, deeming the previous ruling unjust.
Ripple Vs. SEC
It’s interesting to note that Ripple was able to somewhat defeat the SEC by having secondary sales of its XRP cryptocurrency not be regarded as securities. This complex result might have affected LBRY’s choice to file an appeal.
It is important to keep in mind that the SEC is presently attempting to appeal the Ripple case, so the result is not yet definite.
While the SEC vs. LBRY case has garnered attention, it hasn’t provided many insights into how the SEC would treat tokens designed for both investment and consumption. However, LBRY’s appeal to the United States Court of Appeals for the First Circuit hints at a potentially lengthy and contentious legal battle that could shed more light on this issue.
