The January 30th hearing regarding @LBRYcom’s Motion to Limit the SEC’s Remedies is arguably the most important crypto hearing to date.
The SEC is seeking disgorgement from a non-party but also read the SEC’s proposed language for the permanent injunction. 👇
The SEC is seeking disgorgement from a non-party but also read the SEC’s proposed language for the permanent injunction. 👇
https://twitter.com/lex_node/status/1608086676714274822
The proposed language could theoretically allow the SEC to reach into the secondary market and prevent transactions from people who are only users of the platform who never acquired #LBC for investment reasons.
For example, the SEC could NEVER satisfy the Howey test as it applies to @naomibrockwell’s use of #LBC. The SEC stipulated that there are many #LBC holders who only use LBC for the platform, never considering it an investment yet the SEC refuses to issue a no-action letter. 🤔
This is why, on behalf of Naomi Brockwell, I filed the amicus brief and filed a motion to be admitted pro hac on the issue.
This case - not getting a lot of industry attention (ie there aren’t 15 amicus briefs in support of LBRY like in @Ripple) - the following is at issue:
This case - not getting a lot of industry attention (ie there aren’t 15 amicus briefs in support of LBRY like in @Ripple) - the following is at issue:
1) The SEC is inappropriately seeking punitive disgorgement in a NON-FRAUD case.
Judge Netburn in the Ripple case stated that the lawyers at the SEC lacked a faithful allegiance to the law and despite the law, framed legal arguments based solely to advance its desired goals.
Judge Netburn in the Ripple case stated that the lawyers at the SEC lacked a faithful allegiance to the law and despite the law, framed legal arguments based solely to advance its desired goals.
It appears the SEC is doing the same thing in LBRY - even though the SEC won.
LBRY, like Ripple, is a non-fraud case. A strict Section 5 violation - failure to register #LBC sales.
Ask yourself: Why is the SEC seeking disgorgement in this non-fraud, failure to register case?
LBRY, like Ripple, is a non-fraud case. A strict Section 5 violation - failure to register #LBC sales.
Ask yourself: Why is the SEC seeking disgorgement in this non-fraud, failure to register case?
The SEC won summary judgment 🆚 Kik but didn’t seek or ask for disgorgement.
More troubling: SEC alleged LBRY used all the funds raised by token sales to build out the platform and technology. Despite making such claims, the SEC is now claiming ALL the token sales were profits.
More troubling: SEC alleged LBRY used all the funds raised by token sales to build out the platform and technology. Despite making such claims, the SEC is now claiming ALL the token sales were profits.
The SEC - again - is ignoring applicable law. The Supreme Court in Liu v. S.E.C. (2020) requires the SEC to deduct any of LBRY’s legitimate business expenses. If the 💰 from token sales were used - as the SEC alleged - to build the business - that 💰was then legitimate expenses.
It is clear the SEC is being punitive. The question is why? Is for LBRY specific reasons or crypto in general?
2) the second major issue is that the SEC is also seeking disgorgement against a non-party entity. This has huge implications and could set a very bad precedent.
2) the second major issue is that the SEC is also seeking disgorgement against a non-party entity. This has huge implications and could set a very bad precedent.
3) the language of the proposed permanent injunction (which is provided above), coupled with the SEC’s absolute refusal to distinguish secondary market sales or even transactions by users, demonstrates the SEC’s intent to expand its jurisdictional reach into the secondary market.
All the above and more is why I said the January 30th hearing in arguably the most important hearing to date.
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