The future of Ripple continues to hold a tense atmosphere after a U.S. district judge declined to issue a ruling on whether the secondary sale of LBRY Credits (LBC) constitutes a security.
Will the LBRY ruling affect XRP?
A July 11 court verdict by Judge Paul Barbadoro of the U.S. District Court for the District of New Hampshire has caused quite a stir around the decentralized content platform LBRY. The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against it. The situation could set a precedent for another SEC case, this time against Ripple, where Judge Analisa Torres is expected to make a key decision for the Silicon Valley company.
In his ruling, Barbadoro said: “I express no opinion on whether it is necessary to register LBC’s offerings on the secondary market. The secondary market is where investors can buy and sell securities, while the primary market involves direct trading with the issuer of the securities.
The words are causing concern in the XRP community, which is considering whether the verdict will affect the health of their favorite cryptocurrency.
Judge expresses changing views
John Deaton, an American lawyer representing thousands of XRP token holders, contacted Judge Barbadoro to clarify whether LBC constitutes a security. Deaton said the judge is maintaining his “judicial restraint.”
This latest opinion by Barbadoro contradicts what he stated during an appeal hearing in January, when Deaton argued that the secondary sale of LBC did not constitute a securities offering. At the time, the New Hampshire judge explained that an LBC is considered a security only if it is sold directly. Interestingly, even the SEC conceded that a secondary sale of LBC is not a security.
SEC’s victory over LBRY project
Although the SEC won summary judgment in November 2022, in January, during an appeal hearing, it decided to enter into a $22 million settlement. In May, the SEC reversed its position and demanded a fine of $111,000, citing LBRY’s “lack of funding and almost non-existent status.”
Meanwhile, Jeremy Hogan, a U.S. lawyer and Ripple supporter, predicts that Judge Analisa Torres will make a decision within a few months. “In the next two months we’ll have an overall picture, and if Ripple doesn’t win overall, we’ll know the details before the end of the year. If they are unfavorable, we can expect a lengthy appeal process.” – He added.
