The SEC was hoping to seek affirmation on an ambiguous injunction after scoring a victory during a hearing in November 2022, but judges made it clear that the judgment was only for the direct sale.
The United States Securities and Exchange Commission (SEC) has recognized that the sale of LBRY Credits (LBC) tokens in the secondary market is not a security. The amendment came on appeal in LBRY v. SEC filing on January 30. In what many are calling a victory for the entire crypto industry against the over-regulation of the SEC through enforcement, attorney John Deaton made a major argument during the appeal hearing.
The SEC won a summary judgment in his favor at a November hearing 7, 2022. The decision to divide each sale of LBC tokens over six years as an investment agreement without the description and description of the transaction. The SEC hopes to continue its efforts to regulate the secondary market and place it under its mandate.
The SEC asked a New Hampshire District Court judge to uphold a broad and unequivocal ban on its sale. Deaton, who is representing tech journalist Naomi Brockwell as amicus curiae, wants to clarify LBC’s second business deal as he finds the law unreasonable and overbroad.
Amicus curia is a person or organization that is not a party to the case but who has the right to assist the court by providing information, expertise, or insight related to the disputed issues. Deaton cited a report from commercial contract lawyer Lewis Cohen who has reviewed all securities cases in the United States since the SEC case against WJ Howey Co. No court has accepted the underlying asset as security at any time during Cohen’s investigation of securities litigation in the United States.
Deaton convinced the judge that LBC’s second business was not security. The SEC requested an order that did not differentiate between LBRY, company management, and employees in an effort to avoid giving details to LBC. The judge turned to Deaton and said, “Amicus, I want to clarify that my rule does not apply to the secondary market.”
The verdict was a relief to many in the crypto community, in particular, XRP ($0.40) detention. Ripple is currently facing a securities lawsuit from the SEC for the sale of XRP tokens. The recent decision shows that the sale of LBC tokens in the secondary market is not possible, the security can work for Ripple’s long-term trial. A pro-XRP Twitter account said the decision also makes XRP less dangerous.
Another user suggested that the recent ruling could force a settlement in the Ripple case and said:
“This will kill the second case against XRP, can it force a settlement?” Others praised Deaton for his continued work to fight the SEC, as he was involved in the Ripple case.
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