LBRY tanks 35% as US court declares it security

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A U.S. court has ruled in favor of the Secu­ri­ties and Exchange Com­mis­sion (SEC) in its case against LBRY, as it ruled that the blockchain net­work offered its LBC token to investors as a security.

Accord­ing to the Nov. 7 judg­ment, Judge Paul J. Bar­badoro ruled that the evi­dence pre­sent­ed before the court showed that the net­work pro­mot­ed LBC as an invest­ment and that its val­ue would grow through the company’s devel­op­ment of the LBRY Network.

“By inter­twin­ing LBRY’s finan­cial fate with the com­mer­cial suc­cess of LBC, LBRY made it obvi­ous to its investors that it would work dili­gent­ly to devel­op the Net­work so that LBC would increase in value.”

The Judge con­tin­ued that LBRY could not argue that it did not receive a fair notice from the SEC because the com­mis­sion had based its enforce­ment action on a Supreme Court prece­dent that has been wide­ly applied for more than 70 years.

How­ev­er, Judge Bar­badoro not­ed that this might be the first time the rule is applied to an “issuer of dig­i­tal tokens that did not con­duct an Ini­tial Coin Offer­ing (ICO.)”

Speak­ing on the devel­op­ment, the founder of the net­work, Jere­my Kauff­man, said:

“The SEC vs LBRY case estab­lish­es a prece­dent that threat­ens the entire US cryp­tocur­ren­cy indus­try. Under this stan­dard, almost every cryp­tocur­ren­cy, includ­ing Ethereum (ETH) and Doge­coin (DOGE), are secu­ri­ties. The future of cryp­to now rests with an org worse than the SEC: the US Congress.”

A state­ment from the net­work also reit­er­at­ed this view, say­ing the lan­guage used in the judg­ment sets a “dan­ger­ous prece­dent that makes every cryp­tocur­ren­cy in the US a secu­ri­ty, includ­ing Ethereum.”

The SEC filed a case against LBRY in 2021, argu­ing that the firm had vio­lat­ed the Secu­ri­ties Act by fail­ing to reg­is­ter with it and that its LBC tokens were secu­ri­ties. The Gar Gensler-led com­mis­sion is also embroiled in a legal tus­sle with Rip­ple over the sales of its XRP token.

Mean­while, the judg­ment has neg­a­tive­ly affect­ed the price per­for­mance of the LBC token. Cryp­toSlate data shows that the dig­i­tal asset has tanked by rough­ly 35% to $0.01322 fol­low­ing the judgment.



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