Correction: A previous version of this article reported that the SEC had ruled that LBRY’s LBC tokens sold on secondary markets were not securities. That is incorrect, and we regret the error.
The price of LBRY Credits (LBC) has risen more than 67% following social media chatter celebrating what Crypto Twitter is interpreting as a significant win in LBRY’s battle with the SEC. According to attorney John Deaton, founder of Crypto Law and managing partner of Deaton Law Firm, the judge in the case may be poised to allow secondary sales of LBRY’s token to continue.
The SEC took action against the file-sharing and payment network in March 2021, contending that it had sold an unregistered security. The company replied that its LBC token was not a security at all, but a digital currency. The protocol operator lost that case in November last year, setting what LBRY said was a “dangerous precedent” that could lead to all cryptocurrencies being treated as securities.
On Monday, however, the focus turned to the question of whether secondary market sales should be also included in the injunction that the SEC wants the court to approve, which would prohibit the sale of LBC on crypto exchanges.
On this specific point, Deaton, who is unaffiliated with LBRY but also previously raised concerns in SEC’s case against crypto payments company Ripple, appeared as an amicus curiae—a friend of the court.
According to Deaton, the district judge in New Hampshire overseeing the injunction told him, “I’m going to make it clear that my order does not apply to secondary market sales.”
A transcript of the proceedings is not yet available, but it appears Deaton’s words have been enough to give hope back to LBC holders, as the token today jumped in value.
Crucially, however, the judge has made no ruling yet on the injunction and is not expected to do so for weeks. Deaton did not immediately respond to Decrypt’s request for comment.
