LBRY’s Legal Defeat Sets Precedent for Ripple and Coinbase’s Ongoing SEC Battles
In Brief
The US District Court has issued a Final Judgment in the SEC vs. LBRY case, finding LBRY, Inc. liable for violating Section 5 of the Securities Act of 1933 and restraining them from participating in any unregistered crypto asset securities offering, raising implications for ongoing legal battles involving Ripple and Coinbase.
The US District Court for the District of New Hampshire recently issued a final judgement in the Securities and Exchange Commission (SEC) versus LBRY, Inc. case. LBRY, Inc., a blockchain-based digital content distribution platform, was found liable for violating Section 5 of the Securities Act of 1933. The court decision, handed down on November 7, 2022, emerged from the SEC’s motion for summary judgement.
The final judgement now permanently restrains LBRY, Inc. from violating Section 5 and participating in any unregistered crypto asset securities offering, as outlined in Section 21(d)(5) of the Exchange Act. While this case largely revolved around Section 5 violations, it did not delve into secondary sales or the Major Questions Doctrine.
This leads to speculation on the possible impacts on ongoing litigation involving Ripple and Coinbase, both confronting similar allegations about selling XRP as an unregistered security. In particular, XRP lawyer John Deaton and Ripple’s Chief Technology Officer, David Schwartz, expect a summary judgement by Judge Torres in the Ripple case by September.
The final judgement in SEC vs LBRY is out.
— LBRY 🚀 (@LBRYcom) July 11, 2023
In accordance with the court's order and our promises, we expect to spend the next several months winding LBRY Inc. down entirely.
As to what happens to LBRY from here, well, that's up to you. pic.twitter.com/cU8O3nATT6
LBRY and SEC
Deaton underscores the SEC’s reference to the LBRY judge’s summary judgement in the Coinbase case. He argues that the judge did not distinguish between direct sales from the issuer and secondary sales on exchanges. This is an essential point because it brings into question whether Ripple’s selling of XRP tokens falls under the jurisdiction of the SEC or not.
The LBRY case final judgement, therefore, establishes a critical precedent that will impact the ongoing legal confrontations between the SEC, Ripple, and Coinbase. These high-profile cases are a litmus test for the application of federal securities laws to cryptocurrency operations, and the outcomes will shape the future regulatory landscape of the rapidly evolving crypto market.
- Coinbase has been unable to find a compliant pathway to operate in the US due to the SEC and state-level authorities being unyielding in their stance, making it difficult for crypto companies to navigate the regulatory ambiguity.
Read more related articles:
- Hong Kong Lawmaker Welcomes Coinbase Amid U.S. SEC Legal Battles
- Coinbase NFT Marketplace is Finally Live: Will It Beat OpenSea?
- Insights into Ripple Case: SEC Docs Will Be Revealed Soon
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About The Author
Nik is an accomplished analyst and writer at Metaverse Post, specializing in delivering cutting-edge insights into the fast-paced world of technology, with a particular emphasis on AI/ML, XR, VR, on-chain analytics, and blockchain development. His articles engage and inform a diverse audience, helping them stay ahead of the technological curve. Possessing a Master's degree in Economics and Management, Nik has a solid grasp of the nuances of the business world and its intersection with emergent technologies.
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Nik is an accomplished analyst and writer at Metaverse Post, specializing in delivering cutting-edge insights into the fast-paced world of technology, with a particular emphasis on AI/ML, XR, VR, on-chain analytics, and blockchain development. His articles engage and inform a diverse audience, helping them stay ahead of the technological curve. Possessing a Master's degree in Economics and Management, Nik has a solid grasp of the nuances of the business world and its intersection with emergent technologies.
