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LBRY Inc., a blockchain-based digital content network, has filed an appeal against a recent U.S. Securities and Exchange Commission (SEC) ruling. The ruling against LBRY has also turned heads towards the SEC’s case against Ripple Labs as both cases have similarities.
LBRY has filed a Notice of Appeal against the SEC. pic.twitter.com/Zp9S0TP0Qw
— LBRY 🚀 (@LBRYcom) September 7, 2023
SEC vs. LBRY: An Overview
The SEC initially sued LBRY in March 2021, alleging that the company’s native digital token, LBRY Credit (LBC), was an unregistered security. Though the agency didn’t claim fraudulent activity, it sought permanent injunctions and the return of all funds, igniting industry-wide debate.
LBRY defended itself by arguing that its tokens had intrinsic utility, classifying them as commodities rather than securities. Additionally, the company raised the ‘fair notice’ defense, saying that it was not adequately informed that its tokens could be categorized as securities.
Implications for Ongoing Ripple Case
The SEC’s victory over LBRY has incited renewed focus on the agency’s other high-profile case against Ripple Labs. Both LBRY and Ripple avoided Initial Coin Offerings and received angel investments, but their arguments in court diverge significantly. Given that the two cases fall under different judicial jurisdictions, the extent to which LBRY’s outcome will influence the Ripple case remains uncertain.
Industry Reactions and Interpretations
Jeremy Kauffman, CEO of LBRY, warned that the ruling could spell doom for most U.S.-based cryptocurrencies. His concern was echoed by Aaron Kaplan, co-CEO of Prometheum exchange, who suggested that nearly every token, except Bitcoin, could now be classified as a security. Australian Lawyer Bill Morgan also supported the move by LBRY stating that the previous judgement wasn’t good.
Never give up LBRY @jeremykauffman
— bill morgan (@Belisarius2020) September 7, 2023
Everyone is on your side especially holders of the LBC token. I always said it wasn’t a good judgment https://t.co/1Hw5LZWDzM
Regulatory Uncertainties Linger
Despite the highly publicized nature of the SEC vs. LBRY case, it has provided limited clarity on how the SEC will approach tokens with mixed uses—those designed for both consumption and investment. However, things will change now as LBRY’s appeal to the United States Court of Appeals for the First Circuit signals a potentially long and turbulent legal battle ahead.