Attorney John Deaton believes the outcome of the January 30 hearing will significantly affect the future of the crypto market.
Cryptocurrency lawyer John Deaton believes that the outcome of the upcoming LBRY-SEC hearing will set a legal precedent for the cryptocurrency industry in the United States.
After winning the case, the National Securities Market Commission (SEC) wants LBRY to return the proceeds from all sales of the LBC token and stop interacting with investors.
LBRY vs SEC: a Decisive Hearing for the Cryptomarket
Deaton believes that the outcome of the January 30 hearing will significantly affect the future of the crypto market. Instead of deducting ita work expenses and paying back the remaining amount, LBRY would have to pay back all of ita sales revenue, according to the SEC.
Deaton wonders if the real intention of the American stock market policeman is to “punish the cryptocurrency market”. However, the SEC’s request is clearly at odds with its previous allegations that LBRY used all the proceeds from its sales to develop its content creation platform.
As a reminder, the SEC won a lawsuit against LBRY in November 2022, after accusing the platform of violating Section 5 of the Securities Act, by offering its LBC crypto as an unregistered security. LBC is the utility token of the LBRY network, but it is also available on various crypto exchanges, including CoinEx and Bittrex.
In addition to the fraud cases, the LBRY lawsuit is the second case in which the SEC is seeking reimbursement of sales proceeds. Meanwhile, the issuer of the LBC token, which lost the battle, seeks to limit the sanctions that the SEC could impose on it.
Will Ripple Still Be Able to Stand Up to the SEC?
The SEC also accuses Ripple Labs of selling the XRP cryptocurrency as an unregistered financial security and demands that it returns the proceeds from its sales. Therefore, the outcome of the LBRY hearing is likely to influence the court’s verdict on Ripple and the other “unregistered securities” cases.
The SEC’s restitution claim against Odysee, a decentralized video-sharing platform launched by the creators of LBRY, is also troubling, as Odysee became a fully-fledged entity in October 2021.
The SEC has also filed a permanent injunction to restrict commitment to LBRY unless LBC registration is imminent. According to Deaton, the injunction could expand the SEC’s reach into secondary markets, setting a dangerous precedent for the crypto industry.
Following the SEC’s complaint, LBRY said it told investors that LBC’s value will increase as its platform develops. A statement was rejected by the judge, who ruled that LBC is a financial guarantee.
Unlike LBRY, Ripple has been supported by various market players. However, it is unlikely that LBRY wins the legal battle that has been waging for more than two years.
By Audy Castaneda
