Ripple General Counsel Calls LBRY Lawsuit an Injustice, Urges SEC Commissioner To Speak Out Louder and Sooner

October 31, 2023 The Daily Hodl

SEC Commissioner Releases Statement of Dissent Regarding Regulator’s Case Against LBRY

October 30, 2023 The Daily Hodl

Ripple CLO and XRP community back SEC commissioner’s LBRY lawsuit dissent

October 28, 2023 Coin Telegraph

Coin Telegraph

Alderoty showed gratitude toward Commissioner Peirce and suggested that it might be time to submit an amicus brief.

Stuart Alderoty, the Chief Legal Officer (CLO) of Ripple Labs, and the XRP community have expressed their support on the X app (formerly Twitter) for Securities Exchange Commission(SEC) Commissioner Hester Peirce’s stance against the perceived “injustice” in the LBRY lawsuit.

Alderoty showed gratitude toward Commissioner Peirce and suggested that when ongoing injustices occur in non-fraud cases, especially when consumers are still awaiting resolution for actual fraud cases, it might be necessary to disregard standard protocols and raise concerns more vocally and promptly, potentially even by submitting an amicus brief to address the issue.

The SEC Commissioner issued a dissenting statement regarding the LBRY lawsuit on October 27. Peirce emphasized that the commission has recently initiated numerous enforcement actions against cryptocurrency exchanges such as Ripple, LBRY, Kraken, Binance, and Coinbase.

Thank you Commissioner. When you see injustices like this continue in non-fraud cases (while consumers wait for recourse from actual frauds) perhaps it’s time to let ordinary rules of protocol go by the wayside and speak out louder and sooner? Perhaps even with an amicus brief?
— Stuart Alderoty (@s_alderoty) October 27, 2023

Peirce, among the many enforcement actions taken by the SEC, noted that the LBRY lawsuit was particularly disconcerting to her. However, she expressed her inability to publicly discuss it due to the ongoing litigation.

Back in July, LBRY, a platform recognized for its blockchain-based file-sharing and payment network, was determined to have violated Section 5 of the Securities Act of 1933. Consequently, LBRY was permanently barred from engaging, whether directly or indirectly, in any unregistered cryptocurrency securities offerings involving its native token.

The crypto platform initially sought to appeal a judgment by the U.S. SEC but later abandoned the effort due to perceived futility. Notably, the XRP community supported the platform during the legal process, including the appeal. However, with the litigation concluding in the SEC’s favor, LBRY decided to close down, citing financial burdens and regulatory pressure as the reasons for its shutdown.

Pro-XRP lawyer, John E. Deaton, in response to the Commissioner’s statement, suggested that it might be time to submit an amicus brief. Deaton believes that just as 75 thousand individual holders expressed their views in court, it’s also important for someone with insider knowledge to speak out in a court of law.

Deaton had expressed his disapproval of the SEC’s actions against the company, which he believed had caused financial distress. This sentiment aligns with Commissioner Peirce’s perspective, as she clearly articulated in her statement.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?

Hester Peirce speaks out against LBRY enforcement action: ‘The market could have decided’

October 27, 2023 Coin Telegraph

Coin Telegraph

The SEC commissioner said the regulator’s actions “forced a group of entrepreneurs to abandon what they built,” with LBRY announcing in October it planned to wind down operations.

Hester Peirce of the United States Securities and Exchange Commission (SEC) has issued a dissenting opinion on the regulator’s lawsuit against blockchain firm LBRY.

In an Oct. 27 statement, Peirce described feeling “unsettled” following the SEC’s enforcement action against LBRY in March 2021. In November 2022, a judge ruled in favor of the SEC, stating that the firm’s LBC token was a security. Though LBRY appealed the decision, the company announced in October that it planned to wind down, citing millions of dollars in debt due to legal costs.

“This case illustrates the arbitrariness and real-life consequences of the Commission’s misguided enforcement-driven approach to crypto,” said Peirce.

Some overdue thoughts on our case against LBRY: https://t.co/wLsG4Xr7wz
— Hester Peirce (@HesterPeirce) October 27, 2023

According to Peirce, the SEC’s case against LBRY was “puzzling” given there was no evidence of fraud and the firm took a conservative approach to digital assets compared to other crypto projects. The SEC commissioner suggested that there had been no clear path for a project like LBRY to come in and register with the regulator, and “it would not be a particularly useful effort” if it had managed to do so.

“[T]he Commission took an extremely hardline approach in this case,” said Peirce. “For example, after winning on summary judgment, the Commission sought monetary remedies of $44 million and asserted that LBRY’s offer to burn all tokens in its possession was not sufficient assurance that LBRY would not violate the registration provisions in the future. The Commission’s requested remedies were entirely out of proportion to any harm.”

She added:

“The time and resources we expended on this case could have been devoted to building a workable regulatory framework that companies like LBRY could have followed. Then the market could have decided LBRY’s fate.”

“The Commission’s action forced a group of entrepreneurs to abandon what they built,” said Peirce. “Our disproportionate reaction in this case will dissuade people from experimenting with blockchain technology.”

Peirce has often been a dissenting voice at the SEC in crypto-related enforcement cases. In September, she told Cointelegraph that crypto firms shouldn’t give up on trying to launch in the United States, but added she believed the commission was “far behind” in finding a solution for a regulatory framework.

Gary Gensler, who chairs the SEC, has often called on crypto firms to “come in and talk” to the regulator to avoid potential enforcement actions. To date, the regulator has filed lawsuits against crypto exchanges Binance and Coinbase, and many other firms in the space.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?

Community reacts to SEC dropping XRP case and LBRY shutdown

October 20, 2023 Coin Telegraph

Coin Telegraph

While celebrating a new court win in Ripple’s legal battle with the SEC, the community mourns the demise of LBRY, which some say was “regulated to oblivion.”

Ripple’s new win in the legal battle against the United States securities regulators has been marred for crypto enthusiasts by news of the blockchain platform LBRY shutting down operations, which has triggered the community to react.

The U.S. Securities and Exchange Commission (SEC) announced its intention to dismiss all claims against Ripple CEO Brad Garlinghouse and executive chair Chris Larsen on Oct. 19. The event marked a significant legal win for Ripple in the civil case filed by the SEC in late 2020.

On the same day, LBRY, a major blockchain file-sharing and payment network, announced the termination of its operations, citing “several million dollars” in debts owed to the SEC, its legal team and a private debtor. LBRY’s creators are known for building Odysee, an open-source video-sharing website that uses the network, aiming to bring a decentralized alternative to major video platforms like YouTube.

The SEC filed a lawsuit against LBRY in March 2021, accusing the firm of similar securities law violations to those it brought against Ripple. Even after the SEC downgraded the $22 million penalty against LBRY to around $111,000, the firm eventually decided not to continue its appeal against the SEC.

“Whilst we celebrate another massive win for Ripple, let's not forget the damage the SEC has already done to crypto,” prominent XRP influencer, Ashley Prosper, wrote on X (formerly Twitter) on Oct. 19. The crypto enthusiast expressed hope that the LBRY app and its eponymous native token would rise again due to the “rampant censorship on X and the ever-present censorship on YouTube.”

#XRP #XRPCommunity
Whilst we celebrate another massive win for Ripple, let's not forget the damage the SEC has already done to crypto. @LBRYcom has decided not to continue its appeal against the SEC and shut its doors for good today. However, with the rampant censorship on X and… https://t.co/66tOS8L7Z7 pic.twitter.com/6hr3GL6qpi
— Ashley PROSPER (@AshleyPROSPER1) October 20, 2023

“As we celebrate today's XRP ruling, a less successful outcome by a blockchain sued by the SEC went under the radar,” blockchain enthusiast Slorg noted in a thread on X. The poster said it is unfortunate that what was “once a successful Web3 startup with actual user adoption” is now defunct and non-existent. “Regulated into oblivion,” Slorg wrote.

As we celebrate today's XRP ruling, a less successful outcome by a blockchain sued by the SEC went under the radar.

Today LBRY Inc shut down:

1⃣ Background

LBRY set out to become a decentralized, open-sourced digital content platform.

In 2016 they released a token that would… pic.twitter.com/MVgPQbdXxQ
— Slorg (@SlorgoftheSlugs) October 20, 2023

Some social media commenters pointed out a significant difference between Ripple and LBRY in terms of their capital. XRP is the fifth-largest cryptocurrency by market capitalization, valued at $27 billion, while the LBRY credits’ market cap amounts to just about $5.5 million at the time of writing, according to data from CoinMarketCap.

“Ripple would have been LBRY if they didn’t have the funds to fight the SEC,” one X commenter wrote, arguing that the cases’ outcomes make a stark illustration of the way “rich establishments can use the courts to their advantage until they have to battle the big whales.”

According to pro-XRP lawyer John Deaton, the LBRY case highlights the consequences of the industry overreach by the SEC. Deaton criticized the SEC for picking on a small American company, which wasn’t proven to have committed any fraud, but failing to prevent major failures like FTX.

“After millions of dollars were wasted, the SEC got a $130K fine. This case alone proves the SEC is a broken, failed and inept agency,” Deaton stated.

Despite Ripple executives scoring a major legal win, its litigation with the SEC is far from being over, according to some industry observers.

“Expect to see some more litigation in the penalty phase between the two parties in regards to the appropriate penalty for Ripple‘s $700M+ of institutional sales,” Fox News journalist Eleanor Terrett said on X, citing lawyers focused on the XRP case. According to Terrett’s sources, Ripple should expect a big fight as the SEC will still want a substantial amount for bragging rights.

SO, what are next steps in the @Ripple case?

Now that the @SECGov has dropped the charges against @bgarlinghouse and @chrislarsensf, expect to see some more litigation in the penalty phase between the two parties in regards to the appropriate penalty for Ripple‘s $700M+ of… https://t.co/4jJAzKtTjp
— Eleanor Terrett (@EleanorTerrett) October 19, 2023

In the Oct. 19 filing, the SEC mentioned that the SEC and Ripple will confer with respect to its Section 5 violations regarding its institutional sales of XRP. The regulator requested to propose a schedule for further litigation until Nov. 9, 2023.

Magazine: Crypto Twitter Hall of Flame: Pro-XRP lawyer John Deaton ‘10x more into BTC, 4x more into ETH

XRP lawyer John Deaton joins LBRY case as amicus curiae

September 15, 2023 Coin Telegraph

Coin Telegraph

Deaton is known for his active engagements in legal proceedings and discussions surrounding cryptocurrency regulations and legal actions.

Lawyer John Deaton, who represents numerous XRP token holders in the Ripple- Securities Exchange Commission (SEC) lawsuit, has formally submitted his notice of appearance as an Amicus Curiae in the LBRY lawsuit.

According to a document submitted on Sept. 14, 2023, to the United States Court of Appeals for the First Circuit, Deaton has officially submitted his Notice of Appearance on behalf of Amicus Curiae Naomi Brockwell.

Referring to his submission, Deaton said in a post on X (formerly known as Twitter),

“Win, lose, or draw, we will be in the fight!”

Notably, Naomi Brockwell serves as the founder of Crypto Law, a platform dedicated to offering insights and updates on legal and regulatory developments related to cryptocurrencies in the United States, in collaboration with Deaton.

The lawyer is known for his advocacy for the rights of cryptocurrency investors and his active engagements in legal proceedings and discussions surrounding cryptocurrency regulations and legal actions.

In March 2021, the United States SEC initiated a legal action against LBRY, alleging that the company unlawfully sold LBC tokens without registering with the agency, as required by law.

On Sept. 7, LBRY filed a notice of appeal to the United States Court of Appeals for the First Circuit, seeking to challenge the final judgment entered on July 11 that ordered LBRY to pay a civil penalty and barred it from participating in unregistered offerings of crypto asset securities in the future.

In July 2023, the United States District Court for the District of New Hampshire issued the final judgment in the US SEC vs. LBRY lawsuit. The ruling said that LBRY was liable for violating Section 5 of the Securities Act of 1933.

The outcome of the LBRY case was seen as having potential implications for the XRP lawsuit. However, on July 14, 2023, U.S. District Judge Analisa Torres issued a summary judgment in Ripple's favor, determining that the sale of XRP tokens to retail buyers did not constitute securities.

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?

LBRY decides to fight: Blockchain firm files notice of appeal against SEC

September 8, 2023 Coin Telegraph

Appeal

Blockchain-based file-sharing and payment network LBRY is planning to pick up the fight against the federal regulator again after losing the battle in November last year.

Blockchain-based file-sharing and payment network LBRY may be reversing course on an earlier decision to wind down, filing a notice of appeal against a federal judge ruling in July that sided with the Securities and Exchange Commission.

On Sept. 7, LBRY filed a notice of appeal to the United States Court of Appeals for the First Circuit, seeking to appeal the final judgment entered on July 11, 2023, where LBRY was ordered to pay a civil penalty and barred from participating in unregistered offerings of crypto asset securities in the future.

“Defendant LBRY, Inc. now appeals to the United States Court of Appeals for the First Circuit this Court’s final judgment entered on July 11, 2023,” it read.

LBRY has filed a Notice of Appeal against the SEC. pic.twitter.com/Zp9S0TP0Qw
— LBRY (@LBRYcom) September 7, 2023

The SEC first sued developer LBRY, Inc. in March 2021, claiming that its LBRY Credit token (LBC) was sold as a security under the 1933 Securities Act.

The U.S. District Court for the District of New Hampshire granted the SEC’s motion for summary judgment against LBRY on Nov. 7, which barred the platform from offering “unregistered crypto asset securities” and ordered it to pay a $111,614 civil penalty to the SEC.

The regulator originally sought a punishment of $22 million but revised it after conceding the defunct firm couldn’t pay.

In January, founder and CEO of LBRY Jeremy Kauffman told Cointelegraph “LBRY as a company is almost certainly dead.”

Following the final judgment in July, the firm seemed to admit the same, tweeting:

“In accordance with the court's order and our promises, we expect to spend the next several months winding LBRY Inc. down entirely.”

However, LBRY’s most recent move appears to be a possible change icourse. It also comes amid a number of high-profile crypto industry victories against the federal regulator including Ripple and Grayscale.

Cointelegraph contacted LBRY for further comments but had not received a response at the time of publication.

Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?

7 blockchain-based platforms for content creators

July 14, 2023 Coin Telegraph

audius

From Steemit and LBRY to Ujo Music and SuperRare, discover how blockchain technology empowers content creators in the digital age.

Blockchain technology has recently penetrated a number of sectors, altering the way we do business, store data and interact with digital assets. The decentralized and transparent nature of blockchain also benefits content creators, including authors, musicians, artists and photographers.

Blockchain-based platforms offer unique opportunities for content creators to protect their intellectual property, receive fair compensation, and engage with a global audience. This article will explore seven blockchain-based platforms that enable content producers to earn money from their work while retaining creative control.

Steemit

A blockchain-based social media site called Steemit pays content producers in cryptocurrency. By publishing creative material, supporting worthy content and engaging with the platform’s community, users can earn “Steem” tokens.

The decentralized nature of the network ensures that content producers retain ownership and control over their creations. As a blogging platform, Steemit has grown in popularity, drawing content producers from a variety of industries.

LBRY

LBRY is a decentralized platform for publishing and sharing information that makes use of blockchain technology. By eliminating intermediaries, it enables content producers to publish their work directly on the platform.

Thanks to LBRY’s blockchain-based system, creators have complete ownership over their creations and receive fair compensation for their contributions. Additionally, users can find and access a variety of information thanks to LBRY’s distinctive architecture because no centralized authority controls what is made available.

Ujo Music

Ujo Music is a blockchain-based platform specifically designed for musicians and other music industry professionals. It provides an environment where musicians can publish their work, own their rights and receive payment from customers directly.

To make sure that artists are appropriately compensated for their work and have more control over licensing and royalties, Ujo Music makes use of the transparency and smart contracts offered by blockchain technology.

Po.et

Po.et is a blockchain platform that seeks to establish a decentralized, unchangeable database for artistic productions. It enables content producers to timestamp all of their digital assets on the blockchain, such as texts, photos, videos and more.

Creators can demonstrate ownership and a record of the existence of their work by doing this, which can be extremely helpful in situations involving copyright infringement. Po.et gives content producers the ability to enforce their intellectual property rights and offers a market for licensing and remuneration for their productions.

SuperRare

Digital art can be purchased on SuperRare, a blockchain-based marketplace. It enables artists to produce and market original digital works of art in the form of nonfungible tokens (NFTs).

Thanks to blockchain technology, each NFT represents a one-of-a-kind work of art and is indubitably rare. SuperRare gives creators a platform to share and make money from their digital works, and collectors may buy and possess unique digital artworks.

Audius

A decentralized music streaming service called Audius seeks to upend the established music business. It allows musicians to share and profit from their work without using intermediaries. Audius uses blockchain technology to make sure that creators are in charge of their content and are fairly compensated for their efforts.

The platform’s decentralized structure makes it possible for a more inclusive and diverse music ecosystem, which also aids up-and-coming musicians in gaining visibility and forging connections with their audience.

BitClout

Content producers can monetize their social media presence with BitClout, a blockchain-based social media platform. It uses a novel business model where users can purchase and exchange “creator coins” that represent significant figures on the platform.

Fans can support the development of their favorite creators by purchasing creator coins. BitClout gives content producers a fresh method to interact with their audience and open up revenue streams.

SEC Shows Mercy Against LBRY in Lawsuit, Reduces $22,000,000 Fine to $111,000

May 16, 2023 The Daily Hodl

SEC revises $22M punishment against LBRY, seeks $111K instead

May 15, 2023 Coin Telegraph

SEC revises M punishment against LBRY, seeks 1K instead

Coin Telegraph

The SEC originally wanted LBRY to pay millions of dollars in penalties, but now concedes the defunct firm can’t pay up that amount.

The United States securities regulator is seeking to revise its $22 million punishment against decentralized content platform LBRY, acknowledging it is unlikely to be able to cough up the funds to be able to pay it.

In a May 12 filing in a New Hampshire District Court, the Securities and Exchange Commission (SEC) sought an amendment to its request for remedies in its successful case against LBRY.

Instead of seeking the original $22 million — the amount it claims LBRY gained from the sale of its token LBRY Credits (LBC), the SEC has asked the court to impose a fine of $111,614, citing LBRY’s “lack of funds and near-defunct status.”

The request also asks to stop LBRY from “conducting future unregistered offerings of crypto asset securities.”

“The Commission acknowledges LBRY’s representations that it is defunct, ceasing operations, and without the funds to pay a larger fine, and recognizes that a defendant’s ability to pay is a factor when imposing a civil penalty,” the SEC said in the filing.

Millions of dollars spent for a fine of $111,614.00 and a company financially ruined. That helps the world. https://t.co/GhvCS0Az7s
— bill morgan (@Belisarius2020) May 12, 2023

The SEC first filed a civil suit against LBRY in March 2021 alleging the firm’s LBC sales were unregistered securities offerings. It asked for $22 million in disgorgement and for the court to order LBRY to halt any further LBC sales.

The SEC won the case in November 2022, the preceding Judge also ruled LBC was a security.

The SEC said the smaller penalty was a compromise between “the need to balance the deterrence from a penalty with LBRY’s inability to pay.”

In a December filing, LBRY claimed the SEC’s request for $22 million wasn’t reasonable as it was “vastly” overstated and failed to “deduct any of LBRY’s legitimate business expenses.”

LBRY said the SEC’s calculation of the sum was “based on rough, back-of-the-envelope math” and the amount it sought was “simply not supported by the record.”

In December 2022, around a month after the SEC won the case a month prior, LBRY said it “will likely be dead in the near future” due to being “killed by legal and SEC debts.”

Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?

LBRY

Steemit

LBRY

Ujo Music

Po.et

SuperRare

Audius

BitClout

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