LBRY tanks 35% as US court declares it security
LBRY founder says the judgment sets a precedent that could see almost every cryptocurrency, including Ethereum and Dogecoin, termed a security.
We lost. Sorry everyone.
— LBRY 🚀 (@LBRYcom) November 7, 2022
According to the Nov. 7 judgment, Judge Paul J. Barbadoro ruled that the evidence presented before the court showed that the network promoted LBC as an investment and that its value would grow through the company’s development of the LBRY Network.
“By intertwining LBRY’s financial fate with the commercial success of LBC, LBRY made it obvious to its investors that it would work diligently to develop the Network so that LBC would increase in value.”
The Judge continued that LBRY could not argue that it did not receive a fair notice from the SEC because the commission had based its enforcement action on a Supreme Court precedent that has been widely applied for more than 70 years.
However, Judge Barbadoro noted that this might be the first time the rule is applied to an “issuer of digital tokens that did not conduct an Initial Coin Offering (ICO.)”
Speaking on the development, the founder of the network, Jeremy Kauffman, said:
“The SEC vs LBRY case establishes a precedent that threatens the entire US cryptocurrency industry. Under this standard, almost every cryptocurrency, including Ethereum (ETH) and Dogecoin (DOGE), are securities. The future of crypto now rests with an org worse than the SEC: the US Congress.”
A statement from the network also reiterated this view, saying the language used in the judgment sets a “dangerous precedent that makes every cryptocurrency in the US a security, including Ethereum.”
The SEC filed a case against LBRY in 2021, arguing that the firm had violated the Securities Act by failing to register with it and that its LBC tokens were securities. The Gar Gensler-led commission is also embroiled in a legal tussle with Ripple over the sales of its XRP token.
Meanwhile, the judgment has negatively affected the price performance of the LBC token. CryptoSlate data shows that the digital asset has tanked by roughly 35% to $0.01322 following the judgment.