SEC Settles Security Claim In LBRY Case: Crypto Community Calls It A Win
SEC Settles Security Claim in LBRY Case, Community Celebrates Win for Crypto
The United States Securities and Exchange Commission (SEC) recently settled a security claim in the LBRY case, resulting in a major win for the crypto industry. The SEC was hoping to gain recognition that secondary market transactions constituted an investment contract, but judges made it clear that the judgment was only for the direct sale.
- SEC settles on security claim in LBRY case: The US Securities and Exchange Commission (SEC) admitted on record that the sale of LBRY Credits (LBC) tokens in the secondary market doesn’t constitute a security.
- Community celebrates win: Attorney John Deaton sought clarity for LBC secondary market transactions because he found the injunction ambiguous and broad.
- Implications: The settlement is seen as a victory for the entire crypto industry against overreaching regulation by enforcement.
Background of SEC vs. LBRY Case:
The appeal hearing was part of an ongoing lawsuit between tech journalist Naomi Brockwell and the SEC. It all started when Brockwell filed a complaint to cease-and-desist proceedings from October 2018 against her employer, LBRY Inc., alleging it had conducted illegal securities offerings without registering with the SEC. This led to a two year long court battle which culminated in a judgement from November 2022 where summary judgement was awarded in favor of the SEC.
Settlement During Appeal Hearing:
During an appeal hearing on Jan. 30th 2023, attorney John Deaton represented Brockwell as amicus curiae – someone who is not directly involved with the legal case but provides information or insight – and sought clarification on behalf of all those involved. After much deliberation, both sides came to an agreement settling on security claims related to secondary market transactions.
Implications of Settlement:
This settlement has been hailed as a major victory by many within cryptocurrency communities around world as it makes it clear that they do not have to register with SEC if they are selling tokens via secondary markets such as exchanges or over-the-counter brokers. This also sets precedent for other similar cases involving cryptocurrencies going forward.
The settlement reached between Brockwell and SEC is seen as an important milestone for cryptocurrency space as it highlights how powerful decentralized networks can be even under tight regulatory scrutiny. While this does not mean that cryptocurrencies will now be exempt from any form of regulation altogether, this does indicate that governments are willing to take into consideration their unique characteristics before making decisions about them.