A sad day for #crypto and #CardanoNFT 🧵
SEC wins judgment against @LBRYcom meaning that LBRY's token was an unregistered security.
This means that $ADA, $ETH and any #NFT tokens will likely be considered a security. This will impact projects with fungible token distributions.
SEC wins judgment against @LBRYcom meaning that LBRY's token was an unregistered security.
This means that $ADA, $ETH and any #NFT tokens will likely be considered a security. This will impact projects with fungible token distributions.
2/
What happened?
SEC claims that $LBC is an unregistered security that has been sold and delivered interstate.
LBRY makes two arguments:
-It did not offer LBC as a security
-It was not given fair notice to register its offerings
decrypt.co/113754/lbry-lo…
What happened?
SEC claims that $LBC is an unregistered security that has been sold and delivered interstate.
LBRY makes two arguments:
-It did not offer LBC as a security
-It was not given fair notice to register its offerings
decrypt.co/113754/lbry-lo…
3/
What is a security?
The definition of a security captures any instrument that might be sold as an investment. The Howey test is definedas:
1. the investment of money
2. in a common enterprise
3. with the expectation of profits to be derived solely...
What is a security?
The definition of a security captures any instrument that might be sold as an investment. The Howey test is definedas:
1. the investment of money
2. in a common enterprise
3. with the expectation of profits to be derived solely...
https://twitter.com/JAWilsonEsq/status/1589847354886488065
4/
from the efforts of the promoter or third party.
Here, the third component is in dispute.
It's worth mentioning that this case is more than 80 years old, and is laughably outdated/not compatible with the industry and age we're in.
from the efforts of the promoter or third party.
Here, the third component is in dispute.
It's worth mentioning that this case is more than 80 years old, and is laughably outdated/not compatible with the industry and age we're in.
https://twitter.com/jenniferastarte/status/1589734217277091841
5/
This is where it gets murky for #CardanoNFT
To prove that LBRY created an expectation of profit, the SEC relied upon every written thing under the sun. They looked at LBRY tweets, Reddit, interviews, blog posts and even private emails.
LBRY tried to argue that these...
This is where it gets murky for #CardanoNFT
To prove that LBRY created an expectation of profit, the SEC relied upon every written thing under the sun. They looked at LBRY tweets, Reddit, interviews, blog posts and even private emails.
LBRY tried to argue that these...
6/
statements only accounted for 0.25% of all posts and messages from LBRY, however this was shot down. LBRY also argued that it informed some purchasers that the LBC token was not an investment, but this was shot down too...
statements only accounted for 0.25% of all posts and messages from LBRY, however this was shot down. LBRY also argued that it informed some purchasers that the LBC token was not an investment, but this was shot down too...
7/
saying that a disclaimer cannot under the objective economic realities of a transaction.
The court found that LBRY made no secrets in its communication with potential investors that it expected LBC to grow in value through its entrepreneurial efforts, and that a..
saying that a disclaimer cannot under the objective economic realities of a transaction.
The court found that LBRY made no secrets in its communication with potential investors that it expected LBC to grow in value through its entrepreneurial efforts, and that a..
8/
reasonable investor would have understood the connection.
Whats interesting (and problematic) is that the court said that LBRY retained LBC for itself, signalling that it was working to improve the value of its blockchain for itself and any LBC purchasers.
reasonable investor would have understood the connection.
Whats interesting (and problematic) is that the court said that LBRY retained LBC for itself, signalling that it was working to improve the value of its blockchain for itself and any LBC purchasers.
https://twitter.com/lex_node/status/1589655558029643777
9/
What does this mean for #CardanoNFT?
Well, a few things. Firstly, it is likely that L1 tokens like $ADA, $ETH and $SOL would be considered as securities (unless this judgment is overturned).
What does this mean for #CardanoNFT?
Well, a few things. Firstly, it is likely that L1 tokens like $ADA, $ETH and $SOL would be considered as securities (unless this judgment is overturned).
https://twitter.com/jeremykauffman/status/1589666351324753921
10/
Secondly, projects need to really think about their marketing, as you can see from the examples the SEC gave, it’s so broad. Even just saying “the long-term value proposition of LBRY is tremendous”.
Secondly, projects need to really think about their marketing, as you can see from the examples the SEC gave, it’s so broad. Even just saying “the long-term value proposition of LBRY is tremendous”.
11/
Lastly, projects might have to find other ways to provide value beyond token distributions. Retaining any holdings of the token could be seen as expecting a return.
That's it! What do you think?
Lastly, projects might have to find other ways to provide value beyond token distributions. Retaining any holdings of the token could be seen as expecting a return.
That's it! What do you think?
https://twitter.com/LBRYcom/status/1589718365924634624
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