A New Hampshire District Court judge clarified that the security order issued earlier in the legal battle between the US Securities and Exchange Commission (SEC) and decentralized content publishing platform LBRY only applied to direct sales of the project’s tokens.
The decision came during an appeals hearing on January 30, 2023, settling an enduring debate between the SEC and the cryptocurrency community.
Judge explains ruling in LBRY v. SEC
The court initially ruled in favor of the SEC in November 2022 and granted the committee’s request for summary judgment in May 2021.
encrypted potatoes mentioned The Securities and Exchange Commission (SEC) filed a lawsuit against LBRY in March 2021, alleging that the platform sold its native token, LBRY Credit (LBC), as an unregistered security.
The agency claimed that the blockchain platform raised more than $11 million in cryptocurrency and cash from investors from 2016 to 2021. The regulator found the sale of LBC tokens as an investment contract and classified it as a security.
However, LBRY insisted that LBC was not a security because millions of people were active on the platform before any tokens were released. The project also noted that it did not have an Initial Coin Offering (ICO).
During appeal hearing Yesterday the SEC asked the judge to clarify the first order, as it appeared to prohibit the sale of LBC. Interestingly, the tide changed when the judge declared that the injunction only applied to direct token sales.
Notably, the judgment was heavily influenced by the efforts of the barrister, John Deaton, who was present as an amicus curiae.
Potential profit for Ripple?
Deaton cited attorney Louis Cohen’s paper, which evaluated all security operations that have emerged in the United States since the creation of the Howey test. The documents revealed that no court had recognized the underlying asset as collateral.
When Deaton’s persuasion broke the surface, the judge turned to him and said, “Amicus, I will make it clear that my order does not apply to secondary market sales.”
The new development is a huge gain for the crypto community and could prove beneficial to Ripple in its ongoing case against the SEC.
The published judge explains that the security order in LBRY v. SEC was only for the direct sale that appeared first on CryptoPotato.