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According to crypto lawyer John Deaton, a jan's result. 30, 2022 hearing of LBRY’s Motion to Limit the SEC’s Remedies will set crucial precedents for the crypto industry in the U.S.
The motion comes after the SEC filed court documents requesting disgorgement from content distribution platform LBRY and a permanent injunction to restrict investor engagement with LBRY’s LBC token.
LBRY An important audience for the SEC's future actions.
Crypto lawyer John Deaton says that the outcomes of the Jan. 30 audience will affect cryptography in a number of significant ways.
Firstly, Deaton questions whether the SEC wants to punish crypto by requesting that LBRY return all revenues from all LBC token sales instead of first deducting the organization’s business expenses and having them return the balance.
A closer examination of the refund request also reveals a conflict with the original claim of the latter that lbry used all the funds from token sales to build its platform.
The Sec won Lbry's trial in November. 2022 after accusing the platform of violating Section 5 of the Securities Act by offering its LBC token as an unregistered security. Lbc is a token of usefulness on the lbry content network, as well as exchanges on several exchanges, including coinex and bittrex.
After the victory of the dry, lbry now seeks to limit the reparation which the dry can claim against it. This was the second non-fraudulent case in which the Sec requested a refund of sales of non-registered securities. Disgorgement is essentially the return on profits that remain after corporate spending.
In the other case, the Sec seeks to divest itself of corrugation laboratories, an undertaking which it claims to offer as an unregistered guarantee. The outcome of the hearing may influence the view of the Court on the Ripple case and other "unregistered security" cases.
In addition, the claim of the second against odysee, a decentralized and supposedly insolvent video sharing platform, launched by the creators of lbry, is worrisome. Odysee changed into a separate business in October. 2021.
Deaton submits that asking an arm's-length subsidiary of LBRY to opt out creates "a very bad precedent."
The SEC has also filed a standing injunction to restrict its commitment to LBRY unless LBC registration is available soon. That the injunction may extend the scope of the second injunction to secondary markets, setting an alarming precedent for the industry.
SEC Riding on Earlier Win
Launched in 2016, LBRY 9.8 million LBC directly to the public and 44.1 million more through exchanges. The government first kept ?400 million for itself and set aside $100 million for donations to not-for-profit and non-governmental organizations. Approximately $100 million was spent on operating expenditures.
Faced with the dry complaint, the organization said it had told investors lbc value would increase with platform enhancements. One judge rejected lbry's argument that he did not know the investment potential of lbc and decided that lbc was a guarantee.
BeInCrypto contacted Deaton regarding the impact of the upcoming hearing on Ripple but has not yet received an answer.
