Community responds to LBRY collapse and SEC dismissing XRP case
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In the wake of Ripple’s recent legal triumph over the U.S. Securities and Exchange Commission (SEC), there’s a somber mood in the community due to the abrupt closure of LBRY, a platform many claim has been “regulated into oblivion.”
Ripple’s recent legal victory against the SEC was marred by the sudden shutdown of LBRY, a blockchain platform, which prompted a strong reaction within the community.
On October 19, the SEC made an official announcement of its intent to drop all charges against Ripple’s CEO, Brad Garlinghouse, and Executive Chair, Chris Larsen. This marked a significant legal victory for Ripple in the civil case initiated by the SEC in late 2020.
On the same day, LBRY, a prominent blockchain file-sharing and payment network, declared the termination of its operations, attributing it to “millions of dollars” in debts owed to the SEC, its legal team, and a private debtor. The creators of LBRY were known for their creation of Odysee, an open-source video-sharing website operating on the LBRY network, with the goal of providing a decentralized alternative to major video platforms like YouTube.
In March 2021, the SEC filed a lawsuit against LBRY, accusing the company of similar securities law violations as those levied against Ripple. Despite the SEC reducing LBRY’s penalty from $22 million to approximately $111,000, the company eventually decided not to pursue further legal action against the SEC.
While we celebrate another significant win for Ripple, it’s essential to remember the impact the SEC has had on the crypto industry. Noted XRP influencer, Ashley Prosper, expressed these sentiments on October 19, stating her hope for the resurgence of the LBRY app and its native token due to the “rampant censorship on X and the ever-present censorship on YouTube.”
In a Twitter thread, blockchain enthusiast Slorg brought attention to the less successful outcome of a blockchain sued by the SEC, lamenting the transformation of what was once a thriving Web3 startup with actual user adoption into a defunct entity, “regulated into oblivion.”
Several social media commentators have pointed out a significant difference between Ripple and LBRY in terms of capital. XRP stands as the fifth-largest cryptocurrency by market capitalization, with a valuation of $27 billion, while the market capitalization of LBRY credits hovers at just about $5.5 million, according to CoinMarketCap data at the time of writing. One commenter on X articulated the view that Ripple could have met a fate similar to LBRY if they lacked the financial resources to combat the SEC, underscoring the influence of financial means in legal battles.
According to pro-XRP lawyer John Deaton, the LBRY case underscores the consequences of the SEC’s overreach in the industry. Deaton criticized the SEC for targeting a small American company that wasn’t proven to have committed fraud while failing to prevent major failures like FTX. He asserted, “After millions of dollars were wasted, the SEC got a $130K fine. This case alone proves the SEC is a broken, failed, and inept agency.”
While Ripple executives have achieved a significant legal victory, their litigation with the SEC is far from over, according to some industry experts. Expect further legal battles in the penalty phase between the two parties concerning the appropriate fine for Ripple’s institutional sales of over $700 million. Fox News journalist Eleanor Terrett, citing lawyers closely following the XRP case, anticipates a fierce battle, as the SEC aims to secure a substantial penalty for boasting rights. In the October 19 filing, the SEC specified that it would engage in discussions with Ripple regarding its Section 5 violations concerning institutional XRP sales, and it proposed a schedule for ongoing litigation until November 9, 2023.
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