The New Hampshire District Court granted the SEC’s motion for summary judgment. LBRY November 7th.
SEC filings show that LBRY received $12.2 million (cash and virtual currency) from the sale of LBRY Credit.
Judge Peter Barbadoro ruled that a blockchain-based file-sharing and payment platform issued and sold securities in its LBRY credit token in violation of federal securities laws.
The lack of “fair notice” of the issuance and sale of LBRY credits in violation of securities laws was not a defense, the judge said.
The judge’s comments struck a chord with Ripple’s supporters, who are familiar with Ripple’s defense team also alleging that it lacked fair notice in its counter-argument to the SEC.
Lack of fair notice is no defense
In December 2020, SEC Since 2013, it has sued Ripple for allegedly selling $1.3 billion worth of unregistered securities.
The SEC v. Ripple case, nearly two years after its initial filing, has developed numerous legal arguments and provided insight into brokerage practices, including allegations of corruption.
A key element of Ripple’s defense lies in its lack of fair regulatory notice. It alleges that there was a lack of clarity and fair notice regarding Ripple’s obligations under securities law.
This point is exacerbated by the fact that it took the SEC seven years to file the lawsuit, during which the defendants believe no securities law violations occurred.
Counsel for LBRY judgment James K. Filan The New Hampshire Court held that lack of fair notice was immaterial in the court setting.
“The court held that “the SEC’s allegation that LBRY offered LBC as a security cannot be rejected by a reasonable trialist, that LBRY lacked fair notice, and that the SEC has no admissible defense. You have the right to be judged.“
Partner of Law Firm Hogan & Hogan, Jeremy Hogansaid LBRY’s defense that LBRY credits are utility tokens was dismissed due to lack of utility at the time of sale.
utility token Provide access to services rather than specific investments in assetsThey are classified separately from security tokens and Does not require SEC registration under federal law.
Where does this leave ripple?
Founder of Crypto-Law.us, John E. Deaton The SEC said it would present the results of the LBRY case to Judge Torres to strengthen its arguments in the Ripple case. However, he added that this “doesn’t shake my confidence,” teasing a full explanation later.
Earlier today, I @LBRYcom The decision was a victory for @SECGov Said it was written by the SEC and could be read as if the SEC quoted it to Torres. @ Ripple case. But this ruling does not shake my confidence on this issue. #XRP case. I will explain tomorrow at 5pm. https://t.co/Qdv2g7pTyu
John E Deaton (220k followers beware of scammers) (@JohnEDeaton1) November 8, 2022
LBRY will hold a month-long Initial Coin Offering (ICO), April 2018and as Hogan noted, the token had no use at the time.The XRP ledger and XRP token existed before Ripple, and there was no ICO.
The SEC claims that its determination of the token’s security status is based on the Howie test. It states that security properties include tokens and his ICOs that sell profit potential based on the efforts of an entrepreneur or manager.
The cryptocurrency community awaits Deaton’s explanation.