LBRY Sold Tokens as Securities, Federal Judge Rules
Crypto startup LBRY violated securities laws by selling its native LBC tokens without registering with the U.S. Securities and Exchange Commission (SEC), a New Hampshire judge ruled on Monday.
The SEC sued LBRY in March 2021, alleging that LBC tokens were securities and that the startup had violated securities laws by selling them without registering with the agency. LBRY pushed back, claiming that LBC tokens were not securities, and that the SEC did not give it fair notice that its sale of LBC was subject to securities laws, thus violating the company’s right to due process.
Federal Judge Paul Barbadoro, of the District Court for the District of New Hampshire, ruled Monday that “no reasonable trier of fact could reject the SEC’s contention that LBRY offered LBC as a security, and LBRY does not have a triable defense that it lacked fair notice.”
The judge’s ruling on Monday means that the case will not go to trial. A status hearing to determine next steps is slated for Nov. 21.
A LBRY spokesperson did not immediately return a request for comment. LBRY tweeted "We lost. Sorry everyone" after the ruling came out.
This is a developing story and will be updated.