In a legal dispute with the SEC, a district court in New Hampshire has decided against the decentralized publishing platform LBRY.
The Securities and Exchange Commission succeeded against the decentralized publishing platform LBRY in court after establishing that its coin was susceptible to regulatory monitoring.
The court determined that LBRY’s LBC token constituted an investment contract, despite the fact that it was not sold through an initial coin offering (ICO). The initiative was initiated in 2016 with the intention of decentralizing publication.
In its ruling, the New Hampshire District Court said, “LBRY is incorrect concerning both the facts and the law.” Judge Paul Barbadoro approved the SEC’s move for summary judgement, concluding a case that began in March of last year.
The judgement is a significant setback for crypto issuers, many of whom have complained that the SEC is adopting a “regulation by enforcement” strategy. Many advocates of token issuance, like LBRY, assert that the commission has not provided sufficient notice to crypto businesses about how it would apply its control.
In recent months, SEC Chair Gary Gensler has openly rejected this argument while praising the SEC’s implementation of existing rules and the Howey Test, which refers to a U.S. Supreme Court judgement involving whether a transaction qualifies as an investment contract.