Ripple may be anxiously awaiting a decision as a United States district court judge declined to rule on whether the secondary sale of LBRY Credits (LBC) can be considered a security. Judge Paul Barbadoro of the U.S. District Court for the District of New Hampshire issued this ruling in the case brought by the United States Securities and Exchange Commission (SEC) against LBRY, a decentralized content platform.
This ruling could set a legal precedent for Judge Analisa Torres, who is presiding over the SEC's case against Ripple and is expected to deliver a decision in the coming months.
Judge Barbadoro stated in his ruling that he does not take a position on whether the registration requirement applies to secondary market offerings of LBC. The distinction between secondary and primary markets is that the former involves traders buying and selling securities, while the latter entails trading directly from the company issuing the security.
On July 11, John Deaton, a U.S. lawyer representing numerous XRP tokenholders, reached out to Judge Barbadoro seeking clarification on whether LBC qualifies as a security. Ultimately, Barbadoro chose to maintain his "judicial restraint," as Deaton explained. This decision represents a reversal from Barbadoro's previous stance during a January appeal hearing, where Deaton successfully argued that the secondary sale of LBC does not constitute a securities offering.
During the appeal hearing, Judge Barbadoro clarified that LBC is considered a security only when sold directly, and the SEC acknowledged that secondary market LBC sales do not meet the criteria for being classified as a security.
Although the SEC secured a summary judgment in November 2022, it opted to settle for $22 million during the appeal hearing on January 30. Subsequently, in May, the SEC revised its proposed fine to $111,000, citing LBRY's financial difficulties and near-defunct status.
Meanwhile, Jeremy Hogan, a U.S.-based attorney and advocate for Ripple, informed Cointelegraph that Judge Analisa Torres is likely to issue her ruling in the next couple of months.
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