LBRY Case Ruling Raises Questions for Ripple

After a United States district court judge refused to rule on whether the secondary sale of LBRY Credits (LBC) constitutes security, Ripple may have to hold its breath for a while longer.

The case that the United States Securities and Exchange Commission (SEC) brought against the decentralized content platform LBRY was decided on July 11 by Judge Paul Barbadoro of the U.S. District Court for the District of New Hampshire.

Judge Analisa Torres, who is scheduled to rule on the SEC’s case against Ripple in the coming months, may have used the ruling as a legal precedent.

In his decision, Barbadoro stated that a secondary market is where traders buy and sell securities, whereas a primary market involves trading directly with the company that issued the security.

John Deaton, a U.S. attorney representing thousands of XRP token holders, tweeted on July 11 that he had reached out to Barbadoro for clarification on whether or not LBC constituted security.

Barabadoro ultimately chose to maintain his “judicial restraint,” according to Deaton.

In a January appeal hearing, Deaton persuaded Barbadoro that the secondary sale of LBC does not constitute an offering of securities.

In his most recent opinion, however, Barbadoro has reversed himself.

During the appeal hearing, the New Hampshire judge clarified that LBC is only considered a security when sold directly.

The SEC also acknowledged that secondary market LBC sales are not securities.

Despite obtaining a summary judgment in November 2022, the SEC settled for $22 million on January 30 during an appeal hearing.

In May, the SEC revised the amount and asked the court to impose a $111,000 fine, citing LBRY’s “lack of funds and near-defunct status.”

Meanwhile, Jeremy Hogan, an attorney and Ripple supporter based in the United States, stated that Judge Analisa Torres would likely issue her decision within the next couple of months.

“We’ll have the big picture sometime in the next two months, and, unless Ripple completely wins, we’ll know the details before the end of the year. If the details are bad, then we will see appeals that will drag on for a long time.”

“However, this will not affect the average XRP holder,” he added.