The United States Securities and Exchange Commission (SEC) has officially admitted that the sale of LBRY tokens in the secondary market does not constitute a security. The settlement came during an appellate hearing in LBRY v. SEC on January 30.
LBRY audience: What's at stake for ALL cryptocurrencies https://t.co/YPbrBkw0Od
โ CryptoLaw (@CryptoLawUS) January 30, 2023
In what many called a victory for the entire crypto industry against the SEC's overreach regulation by the app, attorney John Deaton settled an important debate during the appeal hearing.
SEC received summary judgment in his favor during the hearing on November 7. The ruling classified each sale of the LBC token over a six-year period as an investment contract without elaborating on the details of the transactions. 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 uphold the broad and ambiguous injunction prohibiting its sale.
Deaton, who represented tech journalist Naomi Brockwell as amicus curiae, sought clarity for LBC's secondary market transactions because she found the court order ambiguous and broad. An amicus curia is a person or organization that is not part of a legal case, but is allowed to help a court by offering information, experience, or knowledge that relates to the issues in the case.
Deaton cited an article by commercial contract lawyer Lewis Cohen that examined all security lawsuits filed in the US since Howey. No court recognized that the underlying asset was security at any point throughout Cohen's examination of US security cases.
Related: The Aftermath of LBRY: Consequences of the Ongoing Cryptocurrency Regulatory Process
Deaton was able to persuade the judge that LBC's secondary market transactions are not securities. The SEC requested an order not to make a distinction between LBRY, company management, and users in an effort to avoid providing clarification for LBC. The judge turned to Deaton and said, "amicus, I'm going to make it clear 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, and the recent ruling stating that the sale of LBC tokens on the secondary market does not qualify as the securities may work in favor of the long-term lawsuit. Ripple duration. A pro-XRP Twitter account said that the ruling also makes XRP a non-security.
If the SEC admitted that LBRY is not a security, then they know for a fact that #XRP definitely not a security
โXRPcryptowolf (@XRPcryptowolf) January 30, 2023
Another user suggested that the recent ruling could force a settlement in the Ripple lawsuit and saying:
โThat will end the sec court case against Could XRP force a deal?
Others praised attorney Deaton for his continued work fighting SEC overreach, as he was also active in the Ripple lawsuit.
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