Ripple CTO David Schwartz has highlighted a part of LBRY’s final ruling considered a victory for LBC token holders.
David Schwartz, CTO at Ripple, has joined other top cryptocurrency stakeholders to react to Judge Paul Barbadoro’s final ruling on the SEC v. LBRY case.
Despite efforts by attorney John Deaton and LBRY attorneys to get Judge Barbadoro to clarify that LBRY Credit (LBC) itself is not a security, the judge refused to do so.
Notably, Judge Barbadoro said the issue of providing clarity for LBC was not litigated. As expected, crypto community members, including attorney Deaton, expressed disappointment with the judge following his refusal to declare that the token itself is not the security.
Ripple CTO Reacts
Interestingly, Ripple’s CTO believes Judge Barbadoro’s final ruling on the LBRY case is still a victory. Schwartz made this known while reacting to Deaton’s tweet regarding the development.
It's at least a victory that it was made clear that ordinary use of the token doesn't violate the injunction.
— David "JoelKatz" Schwartz (@JoelKatz) July 12, 2023
According to Schwartz, the judge clarified that the ordinary use of LBRY Credit does not violate the injunction.
For context, the judge said the SEC did not argue that third-party holders of LBC can violate its proposed injunction. Consequently, Judge Barbadoro said there is no need to subject LBC token holders who acquire the crypto asset for consumptive purposes.
“Given the SEC’s litigation posture, it suffices to say that merely holding LBC or purchasing it for consumptive purposes is insufficient to bring third parties within the purview of Rule 65(d),” an excerpt of the ruling read.
Deaton Agrees With Schwartz
Meanwhile, Attorney Deaton agreed with Schwartz on the part of the ruling where the judge found that the ordinary use of LBC does not violate the injunction.
Additionally, Deaton said the judge’s recognition of a valid consumptive purpose to purchase LBC triggers the Foreman’s case. Per Deaton, the Foreman case clarifies that security laws do not apply to assets acquired for consumptive use.
In this scenario, Deaton argues that the United States Securities and Exchange Commission would not have any jurisdiction.
Correct. Also, although the judge wouldn’t say “the token itself is not the security” he said his Order doesn’t apply to secondary sales because he takes no position and by recognizing there is valid consumptive purposes to purchase the token, it triggers the Foreman case, which…
— John E Deaton (@JohnEDeaton1) July 12, 2023