LBRY Sold Tokens as Securities, Federal Judge Rules | Hacker News Reader

LBRY Sold Tokens as Securities, Federal Judge Rules

coindesk.com

15 pointspeterth35 comments

> One significant case the LBRY ruling could impact is the SEC’s suit against Ripple Labs and two of its executives, who have been charged with selling $1.3 billion in unregistered securities. Much like LBRY, Ripple Labs’ defense has hinged on its claim that its native token XRP is not a security.

The precedents being set with these cases will have an enormous ripple effect on crypto and web3 companies.

Sounds good to me. Hopefully this action against a largely benign organization will scare the bad actors into doing the right thing.

> "The SEC vs LBRY case establishes a precedent that threatens the entire US cryptocurrency industry. Under the SEC vs LBRY standard, almost every cryptocurrency, including Ethereum and Doge, are securities. The future of cryptocurrency in the US now rests in with an organization even worse than the SEC: the United States Congress," he [LBRY founder Jeremy Kauffman] said.

I thought this case was just one more of many, that had all gone this same way. What exactly is supposed to make this case different?

I'm not sure there have been many cases yet. The SEC has certainly published rules in the past that almost every crypto token is a security, but that doesn't mean that those rules have been tested in any sort of adversarial hearing. Either way, crypto companies had a lot of notice that the SEC would go after them if they don't register their tokens as securities with the SEC (unless the tokens fit a very narrow definition of a "utility token" and are usable at the time of the sale).

These SEC rules are a big part of the reason why NFTs took off: those were clearly not securities according to the rules.

The LBRY token was sold the same way every ICO pump-and-dump of 2018 went, but LBRY actually used those proceeds to figure out how to build an okay product. The rules were published. They didn't follow them.

I wouldn’t trust the narrator here. As the CEO, Jeremy is incentivized to exaggerate the impact. It’s yet to be seen whether Bitcoin, Ethereum or Doge will be considered securities. Neither Bitcoin or Ethereum seem to pass the Howey test [0], but who knows.

[0] https://en.m.wikipedia.org/wiki/SEC_v._W._J._Howey_Co.

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