- SEC wins ruling in court against LBRY’s unregistered securities.
- The court also dismissed the fair notice claim made by LBRY.
- Jeremy Kauffman said SEC vs LBRY case “threatens the entire U.S. crypto industry.
LBRY lost the lawsuit to the US government agency, the Securities and Exchange Commission (SEC), for marketing unregistered securities. The content-sharing corporation LIBY shared the news with its crypto community by throwing shade at the SEC.
The announcement stated that “since any information given privately to the SEC ends up leaking, we’d like to be upfront about the fact that LBRY Inc. will likely be dead in the near future.”
The Twitter thread further stated that specifically, LBRY Inc. is shutting down, whereas the LBRY protocol and blockchain will persist, “we expect the LBRY mission to continue on, but the company itself has been killed by legal and SEC debts.”
The SEC has won the LBRY case, but this victory may further cripple the crypto community. The LBRY case is a rare instance of a crypto-related unregistered securities complaint going to court.
LBRY is a digital content network operator. Its most well-known software is the Odysee video-sharing website. Also, LBRY employs LBRY Credit (LBC) to reward members for completing tasks, recommending new users, participating in projects, and producing content. LBC can be mined or bought.
The SEC filed a case against LBRY, seeking a permanent injunction, disgorgement of all cash received with interest, and civil penalties. LBRY maintained that LBC was not meant for investment purposes but had a use on the LBRY blockchain from the moment of its debut. A commodity, not a security, is something having a function.
LBRY further claimed that it had not been provided adequate notice that its assets were subject to securities legislation. The court dismissed LBRY’s fair notice argument, stating that the SEC’s claim was derived from a straightforward interpretation of a Supreme Court decision that has been implemented by hundreds of federal courts for more than 70 years.
Moreover, LBRY’s CEO Jeremy Kauffman expressed in a statement that:
the SEC vs. LBRY case establishes a precedent that threatens the entire U.S. crypto industry.
He further went on to say that according to the SEC vs LBRY standard, almost all cryptos are securities, including Ether (ETH) and Dogecoin (DOGE).
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