“We Lost. Sorry Everyone.”
LBRY, issuer of digital asset LBC has lost its case against the Securities and Exchange Commission in a decision that some have described as a significant setback for the entire crypto sector.
Back in 2021, LBRY was charged by the SEC with conducting an offering of digital assets deemed to be unregistered securities.
According to the SEC’s complaint, between 2016 and 2020 LBRY sold over 13 million LBC to the public via trading platforms. LBRY is said to have sold LBC for Bitcoin then valued at $5 million. In total, the SEC claimed that LBRY received more than $11 million in US dollars, Bitcoin, and services from purchasers who participated in its offering.
We lost. Sorry everyone.
— LBRY 🚀 (@LBRYcom) November 7, 2022
LBRY soon launched a website asking supporters to Help LBRY Save Crypto:
“The SEC doesn’t understand blockchain. The claims made in SEC vs. LBRY would destroy the United States cryptocurrency industry.”
A petition was also fired up on change.org that garnered over 50,000 signatures, calling on the SEC to drop the case.
In the end it was all for nought, as the Judge, Paul J. Barbadoro, decided in favor of the SEC.
“As I have explained, the only issues raised by the parties’cross-motions for summary judgment are whether LBRY offered LBC as a security and whether LBRY received fair notice that it needed to register its offerings. Because no reasonable trier of fact could reject the SEC’s contention that LBRY offered LBC as a security, and LBRY does not have a triable defense that it lacked fair notice, the SEC is entitled to judgment. The SEC’s Motion for Summary Judgment (Doc. No. 55) is granted, and LBRY’s Motion for Summary Judgment (Doc. No. 61) is denied.”
Well known attorney John Deaton, a crypto advocate, called the decision by the court very bad.
The @LBRYcom decision is a very bad decision (it’s why I’ve been talking about this case for the last year) and it is true that if the reasoning utilized by the judge was the law in the United States it would serve a death blow. But it is NOT the law. https://t.co/dUfrooW6yp
— John E Deaton (@JohnEDeaton1) November 7, 2022
LBRY CEO Jeremy Kaufman expressed his disappointment in a single Tweet.
going to allow myself one scream
FUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUCCCK
alright now back to work https://t.co/pPEH2uZIoz
— Jeremy Kauffman 🦔🌲🌕 (@jeremykauffman) November 7, 2022
Some observers are concerned that the judgement may set a precedent that impacts other digital assets that claim to be something other than a security. Current SEC Chairman Gary Gensler has consistently stated that virtually all digital assets are securities with the exception of Bitcoin (and maybe Ethereum).
While LBRY is understanably disappointed in the decision, if the Republicans take control of the House and perhaps the Senate, there is a good chance there will soon be legislation aimed at providing regulatory clarity for digital asset issuers.
