About two years ago, the U.S. Securities and Exchange Commission (SEC) sued Ripple Labs, the company that created and manages the Ripple protocol, alleging that the company’s sale and distribution of XRP tokens constitute the sale of unregistered securities in violation of federal securities laws. The case is ongoing and a ruling is still awaited.
Both parties have filed numerous motions, and the matter has finally reached its conclusion, with the final ruling set to be delivered.
The community is both excited and anxious about the eventual decision. They are looking to LBRY v SEC to make a prediction and determine whether or not Ripple will win.
What’s the LBRY v SEC case all about?
The SEC sued LBRY for offering and selling unregistered securities in violation of Section 5 of the Securities Act of 1933. LBRY claimed that the company was exempt from the Securities Act since their alleged security, the LBC token, was not a security. Instead, according to LBRY, LBC worked as a type of digital currency that is an integral part of the LBRY Blockchain.
A hearing in the US district court for the LBRY v. SEC litigation will take place. The new hearing in LBRY Vs. SEC is anticipated to set a stage for Ripple and the defendants, according to John Deaton, Amicus Curiae in the XRP action.
The LBRY litigation has been compared to the XRP lawsuit in terms of regulatory clearance. The CEO of LBRY, Jeremy Kauffman, pleaded with the court and stated that the company has been at odds with the commission for long five years and has attempted to resolve the issue with the SEC as well.
He emphasized that the crypto sector is being built by a sea of intelligent individuals. However, the SEC does not specify the regulations, and by the end of this litigation, the market should have a better understanding of the rules and regulations.
How does XRP Escape the Security Category?
Bill Hinman’s claim that the digital asset itself is only code was cited by the XRP lawyer. It is marketed as a component of an investment to expand the business. Users of the LBC blockchain who didn’t buy tokens from the LBRY blockchain will win. Similar to this, a sizable number of XRP holders purchased XRP to participate in the XRPLedger. This demonstrates unequivocally that it is not a security.
If we go by this logic, the odds seem to be in favor of XRP in the lawsuit. In some time it will be clear when the court gives out its final ruling on this case.