Ripple, the blockchain platform, has achieved a significant victory in its ongoing legal battle against the U.S. Securities and Exchange Commission (SEC). On October 19, the SEC announced its intention to dismiss all claims against Ripple CEO Brad Garlinghouse and executive chair Chris Larsen. This dismissal marks a major legal win for Ripple in the civil case filed by the SEC in late 2020.
However, the celebration of Ripple’s victory was overshadowed by the news of LBRY, a prominent blockchain file-sharing and payment network, shutting down its operations. LBRY announced the termination of its operations on the same day, citing debts owed to the SEC, its legal team, and a private debtor, totaling several million dollars. LBRY’s creators are known for building Odysee, an open-source video-sharing website that aims to provide a decentralized alternative to major platforms like YouTube.
The SEC had filed a lawsuit against LBRY in March 2021, accusing the company of similar securities law violations to those it brought against Ripple. Although the SEC reduced the $22 million penalty against LBRY to around $111,000, the company ultimately decided not to continue its appeal against the SEC.
The crypto community expressed its disappointment over LBRY’s closure, highlighting the damaging impact of the SEC’s actions on the industry. While celebrating Ripple’s win, XRP influencer Ashley Prosper emphasized the harm caused by the SEC to the crypto space. Prosper expressed hope for LBRY’s resurgence due to the rampant censorship on platforms like Twitter and YouTube.
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Another blockchain enthusiast, Slorg, pointed out the contrast in the financial resources of Ripple and LBRY. Compared to Ripple’s market capitalization of $27 billion, LBRY credits’ market cap amounts to only about $5.5 million. This led some commenters to argue that Ripple could have faced a similar fate as LBRY if it didn’t have the funds to fight the SEC.
Pro-XRP lawyer John Deaton criticized the SEC for targeting a small American company like LBRY, which wasn’t proven to have committed fraud. Deaton argued that the case exposed the SEC’s shortcomings, as it resulted in millions of dollars wasted with only a $130,000 fine imposed on LBRY. He called the SEC a broken and inept agency.
Despite Ripple’s legal victory, the litigation with the SEC is far from over, according to industry observers. Ripple is expected to face more litigation in the penalty phase regarding its institutional sales of XRP, which amount to more than $700 million. The SEC has requested to propose a schedule for further litigation until November 9, 2023.
In conclusion, Ripple’s win against the SEC was marred by the closure of LBRY, highlighting the damaging impact of the SEC’s actions on the crypto industry. While Ripple celebrated its legal victory, the crypto community expressed concern over the SEC’s overreach and the consequences faced by smaller companies like LBRY. The litigation between Ripple and the SEC is ongoing, and the penalty phase is expected to be a significant battle in the future.
