The Securities and Exchange Commission (SEC) admitted that the sale of LBRY Credits (LBC) in the secondary market does not qualify as a security.
In November, the SEC was awarded a summary judgement where all sales of LBC tokens over a six-year period were considered investment contracts and therefore qualified as securities. LBRY appealed the decision and, in an amicus brief, attorney John Deaton settled a major debate.
Deaton asked the court to clarify if LBC token sales in the secondary market are securities, which fall under the SEC’s purview. The lawyer cited a paper by another attorney, Lewis Cohen, that examined all security lawsuits since SEC vs. WJ Howey Co. Cohen found that no court in the US had ruled an underlying asset as security.
Convinced by Deaton’s argument, the judge said he will “make it clear that my order does not apply to secondary market sales.”
The crypto industry applauded the decision and crypto enthusiasts are hopeful that the SEC will settle in a similar case involving Ripple over the sale of XRP tokens.
While the ruling is a victory for LBRY and the community, supporters aren’t yet out of the woods if the SEC remains intimidating in its overreaching way of trying to crush such projects.