Judge sides with SEC in case against Manchester video-sharing web company
Nov. 8 – A federal judge backed the Securities and Exchange Commission case against LBRY Inc., a Manchester video-sharing company, agreeing that its cryptocurrency-like tokens amount to securities that must be registered before trading. can be sold.
If LBRY and its founder Jeremy Kauffman of Manchester do not contest the decision, they could face investor repayment obligations and civil penalties of up to millions.
The decision came Monday in the final days of the election, as Kauffman was campaigning as a Libertarian candidate for the U.S. Senate.
“The SEC vs. LBRY case sets a precedent that threatens the entire US cryptocurrency industry,” Kauffman wrote on Twitter Monday. “By this standard, almost all cryptocurrencies, including Ethereum and Doge, are securities. The future of crypto now rests with an organization worse than the SEC: the US Congress.”
In 2016, Kaufman launched LBRY Inc., whose website Odysee.com is offered as an alternative to YouTube and other video-sharing websites. It leveraged blockchain technology, which Bitcoin and other cryptocurrencies have used to redefine money, to restructure video sharing.
Critics say that without controls, Odyssey is prone to misinformation and inflammatory content.
But the SEC case was about how LBRY finances itself. Part of LBRY involved tokens, called LBCs, which the company offered for sale. Site users could use tokens to pay for content or tip producers.
LBRY has kept millions of tokens and the SEC claimed that they act like securities, investments which are usually corporate stocks or corporate bonds.
Shortly after launch, the company was worth $140 million. Within a month, its market cap soared to $1.2 billion.
This is yet another success for the cryptocurrency, whose values have plummeted in 2022. The SEC has enforced securities laws against companies that mine and release crypto to fund corporate operations . Critics said the crypto doesn’t line up like a traditional stock or bond and argued that, if anything, it should be regulated like a commodity.
An article published on bitcoinist.com was titled “Is Crypto in Danger After LBRY Loss to SEC?” He goes on to say that many cite the LBRY case as one of the most significant legal actions for the crypto industry.
In March 2021, the SEC filed a civil lawsuit against LBRY and the company filed counterclaims. The ruling by U.S. District Court Judge Paul Barbadoro was for summary judgment, where a judge focuses on the law and not facts that might be disputed.
In his ruling, Barbardoro cited several statements by Kauffman and other company officials that treated LBCs more like an investment.
“The SEC’s burden is further eased by LBRY’s statements about its management efforts, such as how ‘LBRY’s long-term value proposition depends…on our team remaining focused on the task at hand. accomplish: build this thing.” On its own, LBRY has made significant management efforts to grow its network and increase the value of LBC,” Judge wrote.
On Monday, LBRY tweeted a link to the decision.
“We’ll lick our wounds a bit but we’re not giving up,” the company wrote in a tweet. “We have a brilliant team, tens of millions of content, hundreds of thousands of creators, and one of the most popular Web3 apps in the world. The best is yet to come.”
Meanwhile, Kauffman was in campaign mode on Tuesday. He posted a photo of himself next to a ballot urging libertarians to vote. And he posted satirical videos created by his campaign – both on Odyssey and on YouTube.