LBRY Fights Back, Files Appeal Against SEC! Ripple-like Situation to Repeat?

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LBRY Inc., a blockchain-based digital content network, has filed an appeal against a recent ruling by the U.S. Securities and Exchange Commission (SEC). The ruling found that LBRY’s native digital token, LBRY Credit (LBC), was an unregistered security.

Moreover, people can’t help but draw parallels with the Ripple case. This seems all too familiar!

LBRY has filed a Notice of Appeal against the SEC. pic.twitter.com/Zp9S0TP0Qw

— LBRY (@LBRYcom) September 7, 2023

SEC vs. LBRY: An Overview

In March 2021, the SEC initially filed a lawsuit against LBRY, alleging that the company’s native digital token, LBRY Credit (LBC), had not been properly registered as a security. While the agency did not accuse LBRY of fraudulent activities, it sought permanent injunctions and the return of all funds. This ignited a heated industry-wide debate.

LBRY countered the SEC’s allegations by asserting that their tokens had inherent utility, categorizing them as commodities rather than securities. Furthermore, the company argued the ‘fair notice’ defense, claiming they were not adequately informed about the potential classification of their tokens as securities.

Here’s some context: Ripple News: LBRY Fined $111K by SEC

How Does Ripple Come in the Picture?

The SEC’s triumph over LBRY has brought renewed attention to the agency’s other high-profile case against Ripple Labs. Both LBRY and Ripple steered clear of Initial Coin Offerings, opting for angel investments instead. However, their legal arguments in court diverge significantly. Because these two cases fall under different legal jurisdictions, it remains unclear how LBRY’s outcome might impact the Ripple case.

Everyone is Concerned

Jeremy Kauffman, CEO of LBRY, warned that the ruling could spell doom for most U.S.-based cryptocurrencies.

"Doing What Must Be Done" is the most succinct, high-level, and thoughtful introduction to my views on how libertarians can create a society based on private-property and mutual consent.

I rarely say things are a must watch, but this one is:https://t.co/PT4pRk8PHY pic.twitter.com/K1njPbpg32

— Jeremy Kauffman (@jeremykauffman) July 11, 2023

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. 

We’re Left Without Clarity… Again

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. 

Related: #FireGaryGensler is Trending! U.S. Rep Davidson Takes Action Against SEC Chairman