Judge Asks SEC to “Take Responsibility” for Not Providing Clarity for Crypto
Deaton shared more details about the final hearing between LBRY and the SEC.
In a tweet today, attorney John Deaton disclosed that U.S. District Judge Paul Barbadoro, who presided over the final hearing between LBRY and the SEC, knocked the SEC for failing to provide clarity for the crypto industry.
According to attorney Deaton, who attended the hearing, Judge Barbadoro told the Securities and Exchange Commission that it “needed to take responsibility for its refusal to provide some guidance and clarity in the space.”
LBRY Slams SEC Officials
Deaton’s comments come after SEC former chief John Reed Stark cautioned LBRY for saying the securities agency is filled with “psychopaths and liars.”
In a series of tweets, the team behind LBRY said the SEC showed the judge one of its tweets where it expressed regret for “being open and honest” with the regulator. The SEC’s decision to share the tweet with the judge angered LBRY’s team, who blasted the SEC for how the agency conducted itself.
However, Stark did not see any need for LBRY to insult officials of the Securities and Exchange Commission, as it could spell further doom for the company.
Wow, calling the SEC an agency filled with “numerous liars and psychopaths.” Not the best legal defense IMHO but also becoming a fairly typical crypto-litigation posture. Not surprising that the SEC has yet to lose a single crypto-related case. https://t.co/OLPOIuEZVv
— John Reed Stark (@JohnReedStark) February 1, 2023
Responding to Stark’s tweet, attorney Deaton said he was in the courtroom when LBRY’s tweet was read. Per Deaton, Judge Barbadoro laughed out in court when the tweet was read and advised the SEC to “stop taking tweets and comments personally.” The judge told the SEC’s attorneys that he understood why LBRY and its executives were angry at the agency, said Deaton.
“The judge said the case didn’t involve fraud or misrepresentation, and LBRY didn’t hide anything and did everything out in the open at a time when the SEC’s treatment of non-ICO cases lacked clarity,” attorney Deaton noted.
According to statements from Deaton, the judge added that LBRY’s entrepreneurs put in so much effort towards the company’s success but “guessed wrong” by opening up to the SEC.
The Judge said that these entrepreneurs put “a lot of blood sweat and tears” into LBRY and just “guessed” wrong. He said he rejected the fair notice defense but the SEC needed to take responsibility for its refusal to provide some guidance and clarity in the space.
— John E Deaton (@JohnEDeaton1) February 1, 2023
Meanwhile, Deaton’s attendance in the hearing was instrumental in prompting the judge to provide clarity for the secondary market sales of LBRY Credit (LBC). As reported, Deaton, who attended the hearing in the capacity of a “friend of the court,” called for the separation of LBC secondary market sales from the initial verdict in November that gave the SEC total victory against LBRY.
Following Deaton’s argument, Judge Barbadorosaid he would clarify that the November ruling does not include LBC secondary market sales.
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