Ripple adherents have continued to fret over a recent U.S. Securities and Exchange Commission(SEC) win in a securities lawsuit filed against blockchain-based file-sharing network LBRY.
James Filan, a former federal prosecutor who has been updating the crypto community on the SEC vs Ripple lawsuit, shared the judgment detailing how the US regulator bagged the win.
“Breaking: New Hampshire Court finds that LBRY offered LBC as a security and that the Fair Notice Defense fails.” Filan tweeted on Monday.
The SEC sued LBRY in March last year, alleging that the network’s LBC tokens were securities and that the network violated the Securities Act by selling them without registering with the regulator. In response, LBRY argued that LBC was not a security and that the SEC had violated its right to due process by failing to give the network a “fair notice” that its offerings of LBC are subject to securities laws.
Delivering the judgement, Federal Judge Paul Barbadoro of the District Court for the District of New Hampshire noted that “no reasonable trier of fact could reject the SEC’s contention that LBRY offered LBC as a security, and LBRY does not have a triable defence that it lacked fair notice,” before granting SEC’s Motion for Summary Judgment.
The case, which could have sweeping implications for the wider crypto industry, has dampened the hopes of crypto adherents who now worry that a similar judgement could be adopted in the SEC vs. Ripple lawsuit given the glaring similarities between the two cases.
Much like LBRY, the SEC has maintained that Ripple’s XRP tokens are securities and that the sale of $1.3 billion worth of XRP to the public was illegal. In response, Ripple and two of its top executives have refuted those claims, adding that the regulator did not give them fair notice that Ripple Labs’ actions were illegal.
Since the case was filed in 2020, the crypto industry has been rallying behind Ripple, with over a dozen entities filing amicus curiae motions in support. Whereas most Ripple supporters have argued that securities laws have unfairly been applied to create uncertainty for the entire industry, the regulator has maintained that “most” cryptocurrencies are securities.
Commenting on SEC’s win, however, “ CryptoLaw’s” John E. Deaton advised against concluding the outcome of the Ripple lawsuit, suggesting that the court may rule differently.
“I’d suggest the industry wait for a decision in the Ripple case before deciding that the sky is falling. Ripple has advanced arguments that
LBRY’s lawyers did not…” wrote Deaton.