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The Federal judge has ruled the case in favor of the SEC and declared that LBRY sold tokens as securities.
Judge Rules Against LBRY
The U.S. Securities and Exchanges Commission (SEC) has won its case against LBRY, where it had accused the latter of selling its native LBC tokens as securities. The company behind the LBRY protocol, LBRY Inc., announced their loss in the legal case on Twitter. The company claimed that the ruling would have industry-wide repercussions and called it a loss for the crypto industry at large.
The case was presided over by U.S. District Judge Paul J. Barbado, whose conclusion statement read as,
“Because no reasonable trier of fact could reject the SEC’s contention that LBRY offered LBC as a security, and LBRY does not have a triable defense that it lacked fair notice, the SEC is entitled to judgment.”
Furthermore, the ruling memorandum expressed that the SEC had presented points that LBRY had offered and sold unregistered securities, which was in violation of Section 5 of the Securities Act of 1933.
Founder Speaks Against SEC
LBRY had countered this point with the explanation that its native LBC tokens were not securities and instead functioned as a digital currency that formed the core of the LBRY blockchain. The company appears to be reeling from the loss but has claimed it would not be giving up.
Talking about the ruling, the team tweeted,
“The language used here sets an extraordinarily dangerous precedent that makes every cryptocurrency in the US a security, including Ethereum.”
LBRY founder Jeremy Kauffman had long since maintained that a pro-SEC outcome of the legal battle would have industry-wide implications. He claims that the SEC is out to destroy the crypto industry in the United States. He has spoken his mind on the matter on several occasions - at the Messari Mainnet conference, in an emailed statement, and even during interviews. Kauffman has also stated that crypto proponents need to enter political fields in order to legalize blockchain and the industry, which is why he is running for Senate in New Hampshire.
Ripple Vs. SEC
Kauffman’s mistrust of the SEC seems to be reverberating across the industry, as several other companies, organizations, groups, and individuals in crypto have started getting more vocal about the SEC’s overreach into crypto regulations. The best example is the much-publicized and ongoing SEC vs. Ripple legal battle. Recently it came to light that a total of 12 amicus briefs (a legal document providing extra relevant information filed by an amicus curiae or a “friend of the court.”) have been filed in support of Ripple.
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