Judge Paul Barbadoro, the US District Judge in charge of the dispute between LBRY and the Securities and Exchange Commission, has called out the regulator for its failure to provide “regulatory clarity” for the crypto industry.
According to a tweet by Attorney John Deaton who was present at the final hearing in the LBRY vs SEC lawsuit, the SEC needed to take responsibility for its lack of focus, clarity, and precision. In addition, the judge also spoke about the method regulators use in gathering information. To him, the method is somewhat unfocused, unstable, and haphazard.
The Judge said that these entrepreneurs put “a lot of blood sweat and tears” into LBRY and just “guessed” wrong. He said he rejected the fair notice defense but the SEC needed to take responsibility for its refusal to provide some guidance and clarity in the space.
— John E Deaton (@JohnEDeaton1) February 1, 2023
Meanwhile, the judge has ruled that the secondary sale of the LBRY Credits cryptocurrency does not qualify as the sale of security but as a digital currency after the SEC filed an injunction to prevent secondary sales.
LBRY Hearing: The Stakes for ALL Crypto https://t.co/YPbrBkw0Od
— CryptoLaw (@CryptoLawUS) January 30, 2023
Also, the judge noted that its earlier ruling is only applicable to the direct sale of the token and not to secondary sales. Therefore Deaton who appeared as “a friend of the court” posits that the judge may allow LBRY’s secondary sales to continue.
Interestingly the ruling of the court, which may be considered a win for the crypto community, gives hope to other platforms like Ripple which are also in court for allegedly trading unregistered securities.
SEC Begged to Provide Clear Guidelines for Crypto
Recall that some time ago, Hester Piece, a US Securities and Exchange Commission (SEC) commissioner also kept on mounting pressure against the regulatory body’s agenda for not containing clarity and detailed explanation on digital assets. Hester said he was disappointed at the chairperson Gary Gensler’s regulatory agenda which failed to include items needed to help companies raise capital, improve investor protection, and clarify crypto.
In the same vein last year, United States Senator Tom Emmer who is an attorney and representative for Minnesota’s 6th congressional district also asked that Gary answer for his flawed “crypto information-gathering efforts”.
Gensler has repeatedly dodged Congress at the expense of investors (hasn’t publicly appeared before the House Financial Services since October 5, 2021), leaving us to learn about the SEC's crypto investigations, like the one into FTX, through the media.
— Tom Emmer (@GOPMajorityWhip) December 9, 2022
Emmer claimed that Gary has been dodging congress citing, however, no matter how he dodges, he must testify before Congress and answer questions about the cost of his regulatory failures.
It is believed that the regulators are not doing enough as the SEC’s focus has always been on issues like the ongoing lawsuit with Ripple and that it is determining if a digital asset falls in the category of securities under the Howey test
