- LBRY is contesting a federal judge’s ruling and has initiated an appeal against the SEC’s judgment, which imposed penalties and restrictions on the platform.
- The SEC accused LBRY of selling its token as a security, leading to a court ruling in favor of the SEC, which imposed a civil penalty and prevented unregistered crypto securities offerings.
LBRY, a file-sharing and payment network utilizing blockchain technology, seems to be changing its previous decision to wind down operations. Instead, they have chosen to contest a federal judge’s ruling from July, which favored the Securities and Exchange Commission.
LBRY Initiates Appeals Process in Response to SEC Actions
On September 7th, LBRY officially initiated the process of appealing to the United States Court of Appeals for the First Circuit. This appeal is aimed at challenging the conclusive judgment issued on July 11th. This judgment not only required LBRY to pay a civil penalty but also prohibited its involvement in future unregistered crypto asset securities offerings.
The document filed by LBRY, Inc. stated, “LBRY, Inc., the defendant, is now pursuing an appeal to the United States Court of Appeals for the First Circuit against the final judgment delivered on July 11, 2023.
LBRY has filed a Notice of Appeal against the SEC. pic.twitter.com/Zp9S0TP0Qw
— LBRY 🚀 (@LBRYcom) September 7, 2023
In March 2021, the SEC initiated a lawsuit against LBRY, Inc., alleging that their LBRY Credit token (LBC) was marketed and sold as a security, falling under the regulations outlined in the 1933 Securities Act.
Subsequently, on November 7, the U.S. District Court for the District of New Hampshire ruled in favor of the SEC’s motion for summary judgment against LBRY. This ruling prevented the platform from engaging in the offering of “unregistered crypto asset securities” and imposed a civil penalty of $111,614 to be paid to the SEC.
The regulatory body initially aimed for a penalty of $22 million but altered its approach when it acknowledged that the now-defunct company lacked the means to make such a payment.
LBRY’s Recent Move Indicates a Change in Course
Back in January, Jeremy Kauffman, the founder and CEO of LBRY, stated in an interview that the company was highly likely to be defunct, saying, “LBRY as a company is almost certainly no longer operational.”
After the definitive judgment was issued in July, the company appeared to acknowledge this fact, as evidenced by a tweet:
In accordance with the court’s order and our promises, we expect to spend the next several months winding LBRY Inc. down entirely.
Nevertheless, LBRY’s latest action suggests a potential shift in direction. This development occurs in the context of several notable successes within the cryptocurrency industry against the federal regulators, such as Ripple and Grayscale.
While the SEC vs. LBRY case garnered significant media attention, it has offered little insight into the SEC’s stance on tokens that serve dual purposes, combining utility and investment features. However, this situation is about to undergo a significant transformation, as LBRY’s decision to appeal to the United States Court of Appeals for the First Circuit hints at a possibly protracted and contentious legal battle ahead.
Backed by the XRP community
The LBRY’s recent declaration has ignited enthusiasm within the XRP community, leading many to anticipate a favorable outcome in their battle against the U.S. SEC. Attorney Bill Morgan expressed his support, stating:
You have a strong backing, particularly from LBC token holders. I consistently voiced doubts about the previous judgment.
Prominent figures within the XRP community, including the staunch XRP advocate and attorney John E. Deaton, joined the chorus of responses following LBRY’s legal move. This represents a significant moment for the cryptocurrency community as they unite to counter the SEC’s seemingly unfounded actions targeting the crypto industry.