LBRY Credits’ Win Against SEC Ignites Hope for the XRP Community
The US Securities and Exchange Commission (SEC) has been going after several crypto projects and companies for claiming that they are selling unregistered securities. In November last year, the SEC won a case against LBRY Credits, with the judge ruling that the LBC token was an investment contract. However, in a recent win for the LBRY community, the judge clarified that the ruling did not include secondary market sales.
LBRY Credits makes a major win against the SEC
Attorney John Deaton has settled a debate eminent in the LBRY vs. SEC lawsuit. The ruling made in favor of the SEC in November could have given the regulatory body legitimacy over the secondary cryptocurrency market. To this effect, the SEC asked the district court judge for New Hampshire to clarify the injunction prohibiting the sale of LBC.
Deaton’s argument revolved around previous lawsuits filed by the SEC. He referred to a paper written by commercial contract attorney Lewis Cohen, which assessed all the security lawsuits filed in the US since the SEC vs. Howey lawsuit. None of these lawsuits were ruled in favor of the underlying asset being a security.
Deaton made his case before the judge on why LBC secondary market sales could not be categorized as securities. He argued that the SEC failed to distinguish between the company’s management, users, and the token. After hearing Deaton’s argument, the judge ruled that the order given in November did not apply to secondary market sales.
LBRY vs. SEC ignites hope for the XRP community
The SEC filed a similar lawsuit against Ripple and its executives in December 2020. The regulator believes that XRP is a security, and its executives engaged in an unregistered securities offering.
In the recent ruling in the LBRY vs. SEC case, the judge ruled that the sale of the LBC token in the secondary market did not qualify as securities. This judgment could work in favor of Ripple, as the XRP community has come out to say that the ruling meant that XRP was also a non-security.
Other users have also said that the ruling could force the SEC into settling with Ripple. The XRP army has also lauded Deaton for his efforts in the Ripple vs. SEC case.
SEC believes most cryptocurrencies are securities
The ruling could also suppress the belief of the SEC that the majority of cryptocurrencies in the market are securities. The chair of the SEC has previously said that Bitcoin was the only crypto asset that could be classified as a commodity.
The SEC recently filed a lawsuit against bankrupt crypto lender Genesis and the Gemini exchange, claiming that the Gemini Earn product is a security. The users of the Gemini Earn product were left counting losses after Genesis halted withdrawals and later filed for bankruptcy.
After filing the lawsuit, the co-founder of Gemini, Tyler Winklevoss, criticized the SEC, saying the exchange had reached out to the regulator to discuss the status of Gemini Earn without success. The LBRY community has also criticized the SEC for failing to work with players in the crypto industry.