Final Judgment Issued in US SEC v. LBRY Case, Implications For XRP Lawsuit And Coinbase

In a recent development in the case of Securities and Exchange Commission (SEC) v. LBRY, Inc., the United States District Court for the District of New Hampshire has issued its final judgment. The ruling finds LBRY, Inc. liable for violating Section 5 of the Securities Act of 1933. Lawyers evaluate as this judgment has significant implications for the ongoing legal battle between the SEC and other exchanges like Coinbase and Ripple..

Judgement In LBRY vs. SEC Case

On November 7, 2022, the Court granted the SEC’s Motion for Summary Judgment, establishing LBRY’s liability for violating Section 5 of the Securities Act. The Court’s ruling (Doc. 86) prompted the Commission to seek the entry of a Final Judgment, which has now been granted by the Court.

The Final Judgment permanently restrains and enjoins LBRY from violating Section 5 of the Securities Act. Additionally, LBRY is permanently restrained and enjoined from participating directly or indirectly in any unregistered crypto asset securities offering, as per Section 21(d)(5) of the Exchange Act.

The ruling in the LBRY case raises questions about the potential outcome of the ongoing litigation in SEC vs Ripple and Coinbase. While the LBRY judgment focused on Section 5 violations, it did not address secondary sales or the Major Questions Doctrine.

No help to the market from this decision on whether the LBC token itself is a security. The judge sidestepped the issue & didn’t entertain the major questions doctrine. The whole case achieved nothing except harm to one company & its employees. So much for clarity through courts.

– Attorney Bill Morgan, July 12, 2023

Implications For Ripple and Coinbase

Ripple’s case involves similar allegations related to the sale of XRP as an unregistered security. Deaton points out that the SEC, in the Coinbase case, cited the LBRY judge’s summary judgment opinion and argued that the judge did not differentiate between direct sales from the issuer (LBRY) and secondary sales on exchanges

This implies the Judge considered them all sales of securities. At least now, Coinbase can say it doesn’t mean that and his order doesn’t apply to those transactions. Not claiming it’s a sweeping victory by any means but I believe it’s better than just having the original decision out there.

– John E. Deaton, July 12, 2023

CoinGape reported recently that XRP Lawyer John Deaton and Ripple’s Chief Technology Officer (CTO) David Schwartz have recently voiced their expectations of a summary judgment by Judge Torresby September.

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