Court rules LBRY’s tokens are securities

New Hampshire judge Paul Barbadorogranted the SEC‘s suit against the blockchain startup LBRY on securities-law violations in the sale of its own tokens.

A hearing to determine the next steps in the case is scheduled for November 21.

“No reasonable finder of fact could dispute the Commission’s assertion that LBRY offered LBC as an investment contract. The startup has no counterarguments regarding the lack of fair notice,” the document says.

SEC filed a lawsuit against LBRY in March 2021.

According to the document, since July 2016 the firm offered digital assets to numerous investors, including U.S. citizens.

The regulator also noted that LBRY worked with a cryptocurrency market maker who acted as an intermediary in the purchase and sale of LBC.

In September 2022, LBRY’s CEO Jeremy Kaufman stated that the regulator wished to “harm or destroy the industry in the United States.” In his view, the case against LBRY could “be applied to every crypto company”.

“The wording used creates an extraordinarily dangerous precedent that turns every cryptocurrency in the United States into a security, including Ethereum,” the team said in response to the court’s decision.

The full ruling in the SEC vs LBRY case can be read here.

The language used here sets an extraordinarily dangerous precedent that makes every cryptocurrency in the US a security, including Ethereum. https://t.co/plLZuzBRpO

— LBRY 🚀 (@LBRYcom) November 7, 2022

Andrew Rossow, a lawyer and adjunct professor of law, in an interview Decrypt stated that the verdict in the LBRY case could set a precedent for Ripple. The fintech startup is the defendant in the SEC’s case regarding the status of XRP tokens.

In support of Ripple in the SEC’s litigation, Blockchain Association, Grayscale and Coinbase backed them.

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