The SEC vs. Ripple case continues to create headlines within the crypto community. But a lesser-known case may provide clarity for the former.
In 2021, the SEC filed a complaint against LBRY, Inc. (a blockchain-based file-sharing and payment network) where the SEC alleged that LBRY violated the Securities Act of 1933. The ‘accused’ offered unregistered securities (LBC) when it sold ‘LBRY Credits’ to numerous investors.
Indeed, the said lawsuit had similar touch points to the ongoing Ripple SEC lawsuit. Now, the SEC’s suit against LBRY is scheduled for trial in September 2022.
A week ago, LBRY pushed back on the agency’s claims and asserted several affirmative defenses. Today, on 18 June, Defendant filed its Memorandum in Opposition to the SEC’s Motion for Summary Judgment. James Filan, an attorney, highlighted the filing in an 18 June tweet.
This filing could support the previous filing, or rather just strengthen Defendant’s claims against the regulatory watchdogs.
— James K. Filan 🇺🇸🇮🇪103k+ (beware of imposters) (@FilanLaw) June 18, 2022
LBRY, the blockchain-based file-sharing, and payment network is designed to create a publication platform that allows uncensored and unlimited digital content interaction. Financial transactions like tipping and subscription of paid content are made on the platform through LBC, its token currency.
In support of its argument that LBRY primarily promoted LBC as an investment opportunity, the Commission only points to a handful of LBRY’s posts and messages. The Commission ignored the overall context and meaning of the posts. The filing stated,
“The Commission cites to a tiny fraction of LBRY’s public posts and messages in purported support to its argument that LBRY promoted LBC for its investment potential.”
The Commission relied on ‘cherry-picked’, stray references from a handful of LBRY’s posts.
In addition, LBRY even censured the SEC as ‘incompetent or malicious’ for submitting fake data.
SEC submitted CoinMarketCap data regarding historical LBRY trading.
The CMC data was 2500% higher than @MessariCrypto's data, which attempts to scrub wash trading.
— LBRY 🚀 (@LBRYcom) June 17, 2022
“SEC enforcement lawyers need to remember the SEC’s mission. The mission is to protect investors, not win cases at all costs. The actual truth should matter. I sincerely wish I could describe this as anything other than attempting to win at all costs. But I can’t.”
Others too blamed the SEC for putting investors at risk just to achieve its goal to win the lawsuit(s). Unless there are additional scheduling changes, the LBRY case will be decided before the SEC’s lawsuit against Ripple Labs for failing to register their offer and sale of XRP.
This is significant because the court’s findings in the LBRY case could be cited in the Ripple case. In fact, the SEC tried to include a ruling in the LBRY case as precedent against Ripple Labs in the Ripple case.