SEC Sues LBRY Over Unregistered Token Sales

SEC Lawsuit Against LBRY

The U.S. Securities and Exchange Commission (SEC) has secured a legal victory against LBRY, a blockchain-based file-sharing and payment network. Federal Judge Paul Barbadoro ruled that LBRY sold its native LBC tokens without registering them as securities, violating federal securities laws.

Key Ruling Details

Judge Barbadoro emphasized that LBRY failed to provide a credible defense, stating that no reasonable argument could refute the SEC's claim that LBC tokens were offered as securities. This decision prevents the case from proceeding to trial, though a status conference is scheduled for November 21 to address unresolved issues.

LBRY's Response and Future Plans

Despite the setback, LBRY expressed determination to continue fighting. The platform highlighted its strengths, including a large content library, a vast creator network, and its status as a leading web3 application. However, the court noted that disclaimers used by LBRY did not alter the economic reality of the token sales.

Industry Reactions and Implications

Crypto community figures like Ben Armstrong and John E. Deaton shared their views. Armstrong believes the ruling does not impact the ongoing XRP vs. SEC case, citing differences in legal strategies. Deaton, however, views the decision as a significant win for the SEC, criticizing the lack of distinction between primary and secondary market sales.

Conclusion

The SEC's victory over LBRY underscores the regulatory challenges facing blockchain platforms. While LBRY plans to continue its legal battle, the ruling may have broader implications for the crypto industry, particularly in how tokens are classified and sold.