Correction: A previous version of this article stated that the SEC had ruled that LBRY tokens sold on secondary markets were not securities. This is incorrect and we apologize for the error.
The price of LBRY Credits (LBC) surged more than 67% after a social media conversation celebrated what Crypto Twitter interprets as a huge victory in LBRY’s battle with the Securities and Exchange Commission. According to attorney John Deaton, founder of Crypto Law and managing partner of Deaton Law Firm, the judge in the case may be willing to allow secondary sales of LBRY tokens to proceed.
The Securities and Exchange Commission took action against the file-sharing and payment network in March 2021, alleging that it sold an unregistered security. The company responded that its LBC token was not a security at all, but a digital currency. The protocol operator lost that status last November, setting what LBRY described as a “dangerous precedent” that could lead to all cryptocurrencies being treated as securities.
However, the focus on Monday shifted to the question of whether secondary market sales would also be included in the injunction the SEC wants court-approved, which would ban the sale of LBC on cryptocurrency exchanges.
On this very point, Deaton, who is not affiliated with LBRY but previously raised concerns in the SEC case against crypto-payments company Ripple, has emerged as amicus curiaeA friend of the court.
According to Deaton, the New Hampshire County judge overseeing the injunction told him, “I will make it clear that my order does not apply to sales on the secondary market.”
A copy of the proceedings is not yet available, but Deaton’s words seem to have been enough to restore hope to LBC holders, as the token’s value jumped today.
Crucially, however, the judge has not decided on the injunction, and is not expected to make a decision on the matter for several weeks. Deaton did not immediately respond DecryptComment request.