Thread by @JohnEDeaton1

On January 30 at 3 pm there’s a hearing in the @LBRYcom case. I’ve been admitted in the case and filed an appearance on behalf of @naomibrockwell. It is my honor to represent Naomi, who epitomizes the need for regulatory clarity regarding users and secondary market transactions.

https://twitter.com/attorneyjeremy1/status/1611793851311706114

Naomi has NEVER purchased a single #LBC AND has NEVER sold #LBC.

She EARNED the #LBC she owns through user tips, purchases by viewers, and user rewards.

Naomi has NEVER cashed out any of her #LBC because it is far more valuable to her to keep the #LBC attached to her channel because “staking” helps her videos get viewed by a larger number of people.

Again, to this day, Naomi Brockwell has NEVER purchased or sold a single #LBC.

Naomi USES the LBRY platform every single day. As a content creator, it is a great place for her to build an audience and feel comfortable that her channel is not going to be taken away from her.

Isn’t that one of the beauties of a decentralized platform and why we need an alternative to YouTube?

During the last five years, Naomi has accumulated all of the #LBC tokens that she owns by utilizing her channel.

Naomi wasn’t even aware that the #LBC tokens that she had accumulated, through her channel, had a monetary value associated with them - until only a few years ago.

Again, she has NEVER sold or bought any #LBC tokens. She uses the tokens on a daily basis in the ordinary course of her business to post content, to give her content more visibility, and to access certain videos.

On Nov. 7, 2022, the Judge in @LBRYcom, entered an Order granting the SEC Summary Judgment. The Court’s Order does not reference secondary market acquisitions of #LBC. Nor does it address #LBC token holders, like Naomi, who acquired #LBC for non-investment purposes.

The Court did conclude, however, that many individuals, like Naomi, acquired #LBC for consumptive use only.

At the July 20, 2022 hearing, Judge Barbadoro said:

“I think this record does contain evidence that there are consumptive uses for #LBC. I think that's undeniable.”

In my Amicus Brief, I cite @NYcryptolawyer’sincredibly important article “The Ineluctable Modality of Securities Law: Why Fungible Crypto Assets Are Not Securities, dated Nov. 10, 2022 and I attached the ENTIRE ARTICLE as Exhibit B to my Amicus Brief.

I cite Lewis’ article that the Judge’s Order “failed to distinguish among the sales that were made to purchasers that had a bona fide consumptive intent and those who were offered, and who purchased, #LBC tokens w/a reasonable expectation of profit from the efforts of LBRY.”

There was a Court hearing on November 21, 2022. I have the Court transcript and I can tell you that the transcript is pure 🔥 and that Judge Barbadoro is keenly aware of the issue. The fact that he granted a hearing and allowed the amicus briefs is proof positive.

Due to local rules, I cannot publish the transcript on @CryptoLawUS for some time.

The purpose of the November 21 hearing was to discuss the appropriate remedies sought by the SEC.

@jeremykauffman spoke up and offered to divest @LBRYcom’s all remaining pre-mined #LBC tokens.

Doing this would mean that no secondary token holders could be argued to have a reasonable expectation of profit based on the entrepreneurial or managerial efforts of LBRY.

At the November 21, 2022 hearing the word clarity in relation to secondary market transactions appears a dozen times. The Judge recognized the need for clarity and urged the SEC to work with LBRY to resolve the issues, including by providing clarity to secondary #LBC holders.

According to LBRY, it “provided the SEC with a settlement proposal consistent with the framework laid out by the Court.”

After the parties were unable to reach a resolution consistent with the Judge’s suggestion, including clarity regarding secondary market sales, LBRY filed a Motion to Limit the SEC’s Remedies.

The SEC has responded and it will not offer any clarity regarding secondary market transactions. The SEC attorney said, in so many words, that that’s not what the SEC does.

Instead, the SEC is seeking a permanent injunction and you can read it for yourself. 👇👇 🤦

Clearly, Naomi, as well as hundreds of thousands of other users, have significant interests as secondary market token holders – people who have not transacted with, or purchased #LBC from LBRY or its executives, and who do not view #LBC as an investment.

I argue to the Court that, today, #LBC holders, like Naomi, arguably have a greater interest than LBRY. I point out that the Judge recognized that LBRY “could go out of business today and the LBRY blockchain would continue in perpetuity just like the #Bitcoin blockchain.”

LBRY has indicated that it will be dissolving the corporate entity. Thus, there are many holders, like Naomi, who want to use #LBC on the LBRY blockchain and should be able to do so without confusion over whether secondary sales are restricted.

If you could read the transcript you would understand why this hearing is so important. The over broad injunction proposed by the SEC alone speaks for itself.

There are over 1M users of the LBRY blockchain daily.

I met @Scaramucci’s Professional Crypto Trader at a function that I was speaking at (his card is in my office). I brought up #LBC to this professional crypto trader. He responded: “I’ve never heard of it.”

Ask yourself, how many people are truly speculating on #LBC’s price?

Plus, the SEC has stipulated that many if not the majority of #LBC holders are users and have no investment intent. The SEC couldn’t prove the first prong of Howey let alone all the prongs related to these transactions. But it refuses to issue a no action letter or give clarity.

I don’t know what the Judge will do, but I know that this January 30 hearing is a very important hearing.