SEC vs. LBRY Credits
- In November 2020, the US Securities and Exchange Commission (SEC) won a case against LBRY Credits for claiming that they were selling unregistered securities.
- However, in a recent win for the LBRY community, attorney John Deaton argued that the SEC failed to distinguish between the company’s management, users, and the token.
- The judge ruled that the order given in November did not apply to secondary market sales.
Hope for XRP Community
The ruling in favor of LBRY could work in favor of Ripple as well. The SEC has filed a similar lawsuit against Ripple and its executives for claiming that XRP is a security. Thus, this ruling could force the SEC into settling with Ripple. The XRP army has also lauded this victory by LBRY as it could mean that XRP is seen as a non-security.
Argument Made By Attorney Deaton
Attorney John Deaton made an argument before the judge on why LBC secondary market sales couldn’t be categorized as securities. He referred to a paper written by commercial contract attorney Lewis Cohen which assessed all security lawsuits filed in the US since Howey vs. SEC lawsuit. None of these lawsuits were ruled in favor of underlying asset being a security. Thus, Deaton argued that the SEC had failed to distinguish between company’s management, users and token while making their case against them.
Judge’s Ruling on Secondary Market Sales
After hearing Deaton’s argument, Judge ruled that order given out in November did not apply to secondary market sales. This judgment works favorably both ways; it clarifies the position regarding sale of tokens through secondary markets and also gives hope to XRP community whose fate lies with SEC’s decision regarding their case against ripple and its executives.