The final decision in the matter of SEC v. LBRY has been released by the United States District Court for the District of New Hampshire. The court rules that LBRY, Inc. broke the Securities Act of 1933’s Part 5 and fines the company as a result.
Lawyers evaluate the significance of this ruling in light of the ongoing legal battle between the SEC and other parties including Coinbase and Ripple.
breach of the Securities Act
On November 7, 2022, the Court approved the SEC’s motion for abstract judgement, finding LBRY liable for violating Part 5 of the Securities Act. The Fee moved for the entry of a Last Judgement, which the Courtroom has now approved, in light of the Courtroom’s decision (Doc. 86).
Because of the Last Judgement, LBRY is forbidden from breaking Part 5 of the Securities Act any further. Furthermore, pursuant to Part 21(d)(5) of the Trade Act, LBRY is utterly forbidden from taking part in, or causing or permitting any other person to take part in, any issuance of crypto asset securities that is not registered under the Act.
The outcome of the ongoing legal battle between the SEC, Ripple, and Coinbase is uncertain in light of the LBRY resolution. The LBRY ruling, which instead focused on Part 5 offences, did not touch the Main Questions Doctrine or secondary sales.
Similar allegations regarding the promotion of XRP as unregistered securities form the basis of Ripple’s case. According to Deaton, the SEC asserted that the court erred by failing to distinguish between large sales from the issuer (LBRY) and secondary sales on exchanges and utilized the abstract judgement ruling in the LBRY case to support its position in the Coinbase case.