The U.S. Securities and Exchange Commission filed a lawsuit against LBRY in March 2021. According to the allegation, the project sold its LBRY Credits (LBC) token — which are deemed as unregistered securities — for an accumulated sum of $11 million.
Currently, a judge court ruled in favor of the SEC. District Judge Paul Barbadoro ruled that no unbiased fact-finder could disagree with the SEC’s claim that LBRY presented LBC as a security.
LBRY asserted throughout the proceedings that the SEC had not given it proper notice that it had infringed securities laws. According to the recent ruling, LBRY “does not have a triable defense” and noted that other token sales, including non-ICOs, have been regulated by securities law.
LBRY tweeted about the case’s conclusion, stating they lost the case but will not give up. The initiative emphasised the expertise of its team and the volume of its content, stating that “the best is yet to come”.
Despite the optimism, LBRY’s market value is declining. Over the past 24 hours, the price of LBRY’s LBC token has decreased by 7.13%. Relatively speaking, the total market capitalization of cryptocurrencies is down 3.79% presently.
The conclusion of the lawsuit, according to LBRY, creates an “extraordinarily dangerous precedent” that might prompt regulators to declare all cryptocurrencies securities, even Ethereum.
Whereas the SEC has fined a number of other cryptocurrency projects for conducting unregistered token offerings, the majority of those organizations have promptly reached a settlement and incurred a fine, frequently without being required to admit fault.
Few organizations have contested such claims. Particularly, the Canadian social media site Kik engaged in legal conflict with the SEC over claims of an unregistered securities offering. In 2020, it eventually lost that case.
Ripple is also involved in a long legal battle with the SEC due to identical charges involving its XRP coin. It is estimated that Ripple’s continuing legal battle will be resolved by the second half of 2023.
