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ARTICLE · 23 NOVEMBER 2022

US District Court Finds LBRY Tokens Are Securities

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In 2016, crypto startup LBRY launched the LBRY network and the LBRY protocol, described by LBRY as a decentralized content sharing and publishing protocol that supports the creation of community-run digital marketplaces.

United StatesTechnology
Teresa Goody Guillén
Teresa Goody Guillén
Joanna Wasick
Joanna Wasick
Adam Gale
Adam Gale
Kevin R. Edgar
Kevin R. Edgar
Robert A. Musiala Jr.
Robert A. Musiala Jr.
Veronica Reynolds
Veronica Reynolds
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Takeaways:

  • The Court granted the U.S. Securities and Exchange Commission's (the SEC) motion for summary judgment, holding that LBC tokens are securities and that the offers and sales of the tokens by LBRY, Inc. (LBRY) violated the federal securities laws.
  • The Court held that based on the unique facts and circumstances in this case, the tokens are securities because purchasers bought the tokens for investment purposes based on, among other things, LBRY employees' statements that LBC would increase in value due to LBRY's efforts and that LBRY holds a significant amount of LBC, which the Court stated incentivizes LBRY to make efforts to increase the token value, which would reasonably lead investors to believe the same.

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