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- The court determines that LBRY, Inc. breached Section 5 of the Securities Act of 1933.
- Legal experts evaluate the implications of this ruling concerning the Coinbase and Ripple cases.
The United States District Court for the District of New Hampshire has issued its final ruling in the SEC v. LBRY case. The court finds that LBRY, Inc. has violated Section 5 of the Securities Act of 1933 and imposes penalties on the company accordingly.
Given the ongoing legal battles between the SEC and entities such as Coinbase and Ripple, legal professionals are analyzing the implications of this ruling.
Violation of Securities Act
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The Court granted the SEC’s Motion for Summary Judgment on November 7, 2022, determining LBRY liable for violating Section 5 of the Securities Act. Following the Court’s decision (Doc. 86), the Commission requested the entry of a Final Judgment, which the Court has now approved.
Consequently, the Final Judgment prohibits LBRY from further violations of Section 5 of the Securities Act. Additionally, under Section 21(d)(5) of the Exchange Act, LBRY is permanently barred from participating in, or allowing any other individual to participate in, any issuance of crypto asset securities that is not registered under the Act.
The LBRY ruling raises uncertainties regarding the outcome of the ongoing disputes between the SEC and Ripple and Coinbase. The Major Questions Doctrine and secondary sales were not addressed in the LBRY ruling, which primarily focused on violations of Section 5.
Similar allegations regarding the sale of XRP as unregistered securities are central to Ripple’s defense. According to Deaton, the SEC has leveraged the summary judgment ruling in the LBRY case to bolster its stance in the Coinbase matter, contending that the court failed to differentiate between primary sales from the issuer (LBRY) and secondary sales on exchanges.
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