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SEC wins Landmark Ruling against LBRY, implications for Ripple loom



Judge Paul Barbadoro of the United States District Court for the District of New Hampshire has ruled in a lawsuit bordering on whether the secondary sale of LBRY Credits (LBC) counts as a security. The United States Securities and Exchange Commission (SEC) obtained this decision in a dispute against the decentralized content platform LBRY.

Judge Barbadoro’s decision may establish legal precedent for Judge Analisa Torres, who is expected to deliver a verdict in the SEC’s case against Ripple in the near future.

Refusing to take a position on the registration requirement for secondary market offerings of LBC, Judge Barbadoro emphasized, 

“Accordingly, I take no position on whether the registration requirement applies to secondary market offerings of LBC.” 

While primary markets facilitate direct trading between the company and investors, secondary markets involve the buying and selling of securities among traders.

Judge Barbadoro has been contacted by John Deaton, a lawyer for many XRP token holders, requesting clarification on whether LBC should be regarded as a security. Barbadoro ultimately decided to continue exercising his “judicial restraint,” as Deaton expressed.

This latest opinion from Judge Barbadoro represents a departure from his earlier stance. During a January appeal hearing, Deaton successfully convinced the judge that the secondary sale of LBC does not qualify as a securities offering. Barbadoro clarified during the appeal hearing that LBC is only considered a security when sold directly. The SEC also acknowledged that secondary market sales of LBC do not fall under the securities classification.

Despite receiving a summary judgment in November 2022, the SEC decided to reach a $22 million settlement during the appeal hearing on January 30. Nevertheless, the SEC altered its proposed fine in May and asked the court to impose a $111,000 charge due to LBRY’s “lack of funds and near-defunct status.” 

Meanwhile, Judge Analisa Torres is expected to issue her decision in the next few months, according to Jeremy Hogan, a Ripple supporter and American-based attorney, who spoke with Cointelegraph.

“We’ll have the big picture sometime in the next two months, and, unless Ripple completely wins, we’ll know the details before the end of the year. If the details are bad, then we will see appeals that will drag on for a long time.”

However, Hogan added that such outcomes would not have a significant impact on a typical XRP holder.


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