Renowned crypto lawyer John Deaton, known for his advocacy for XRP holders in their SEC battle, has entered the LBRY lawsuit as an Amicus Curiae. Here’s the latest.
On September 13, John Deaton submitted a formal notice expressing his intention to serve as Amicus Curiae in the LBRY court case. Amicus Curiae, Latin for “friend of the court,” is an entity not directly involved in a lawsuit but offers expertise or information to assist the court in its decision-making process.
This move follows LBRY’s recent appeal filing to the United States Court of Appeals for the First Circuit. LBRY is challenging a final judgment issued on July 11, which imposed a civil penalty and prohibited unregistered cryptocurrency securities offerings.
John Deaton took to social media, emphasizing his commitment to the cause, stating that, “Win, lose, or draw, we will be in the fight!“
SEC’s Lawsuit Against LBRY
The legal battle began in March 2021 when the SEC filed a lawsuit against LBRY, alleging the unlawful sale of LBC tokens without proper registration. In November 2022, LBRY faced further SEC charges for selling LBC tokens without a license, violating section 5 of the Securities Act of 1933.
The SEC classified LBC as an unregistered security based on the Howey test, resulting in a $22 million penalty mandated by the New Hampshire District Court.
LBRY contested the penalty, arguing it failed to consider legitimate software development and hosting expenses. Despite their efforts, LBRY lost the legal battle in July 2023 and announced plans to gradually wind down its operations.
The reduced penalty imposed was $111,614, and LBRY was immediately prohibited from future activities involving securities law violations or unregistered offerings of crypto securities.
Ripple’s Influence on the LBRY Case
Recent legal victories by Ripple and Grayscale against the SEC have generated optimism for a favorable outcome on appeal. Ripple’s case, which shares similarities with LBRY’s, resulted in a summary judgment in Ripple’s favor.
The judgment declared that the sale of XRP tokens to retail buyers did not constitute securities. This outcome holds potential implications for LBRY’s lawsuit.
On September 7, LBRY filed its appeal with the United States Court of Appeals for the First Circuit, citing the SEC’s decision as unjust and incorrect. LBRY perceives the SEC’s intent to harm the broader cryptocurrency industry and vows to resist.
John Deaton’s involvement in this case further emphasizes his dedication to cryptocurrency legal matters. He, along with Naomi Brockwell, co-founded Crypto Law, a platform dedicated to providing insights and updates on cryptocurrency-related legal and regulatory issues in the United States.
