Prominent crypto startup, LBRY has initiated a filing to appeal a court judgment that declared its token, “LBRY Credits” as a security. In the filing, the firm called for the reversal of the decision which directly placed its token under the regulatory oversight of the United States Securities and Exchange Commission (SEC).
Recall that the regulator had earlier sued LBRY Credits, accusing its team of selling unregistered securities in the form of LBRY. Don’t forget that the firm runs as a decentralized content publishing protocol. It usually leverages its native token to facilitate the buying and publishing of content. However, the SEC sees the token as a security, and therefore believes its sale without due registration violates the law.
Legal tussle between the SEC and LBRY
Meanwhile, the complaint against LBRY by the SEC came alive around mid-2021. In the filing, the regulator accused the firm of selling LBRY Credits to several investors within the United States between 2016 to 2021. It added in the filing that LBRY made the sales without making any registration statement. According to the complaint, the firm amassed not less than $11 million in U.S. dollars and Bitcoin from investors in the offering.
LBRY was quick to slam the SEC’s complaint, describing it as a broad assault against the crypto economy in the country. Then, it called for unity among actors in the industry to fight the aggressive actions of the agency.
Nevertheless, LBRY suffered a setback in its defense against the lawsuit in late 2022. The New Hampshire District Court granted SEC’s motion against the firm. Judge Paul Barbadoro, in a ruling, affirmed the token as an investment contract, and therefore, labeled it as a security. This declaration positions LBRY Credits under the regulatory oversight of the SEC.
Now, the crypto startup has taken a bold step to appeal the decision. It aims to bank on the recent ruling that XRP is not a security. Recall that Judge Analisa Torres made the declaration in July 2023 after about three years legal battle between the SEC and Ripple. Just like LBRY Credits, the SEC defined XRP as a security and sued Ripple for selling the token without registration. Although the regulator plans to appeal the judgment, there is no doubt that it suffered a huge blow in its battle against Ripple.