Ripple recently celebrated a significant legal victory in its ongoing battle with the U.S. Securities and Exchange Commission (SEC).
On October 19th, the SEC announced its intention to dismiss all claims against Ripple CEO Brad Garlinghouse and Executive Chair Chris Larsen.
This development marked a crucial moment in the civil case initiated by the SEC in late 2020, offering a glimmer of hope for Ripple.
However, the cryptocurrency community’s elation over this news was tempered by another announcement on the same day. LBRY, a prominent blockchain file-sharing and payment network, revealed that it was shutting down its operations.
LBRY cited mounting debts, owed to the SEC, its legal team, and a private creditor, amounting to several million dollars.
LBRY’s creators are renowned for their work on Odysee, an open-source video-sharing platform aimed at providing a decentralized alternative to mainstream platforms like YouTube.
LBRY had been embroiled in its legal dispute with the SEC, which filed a lawsuit against the platform in March 2021 for alleged securities law violations, mirroring its action against Ripple.
Despite the SEC reducing LBRY’s initial $22 million penalty to around $111,000, the company chose not to pursue further legal action.
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The crypto community reacted with mixed emotions. While celebrating Ripple’s victory, many expressed concern about the regulatory overreach and its consequences for smaller players in the industry.
Notably, XRP, Ripple’s cryptocurrency, boasts a market capitalization of $27 billion, while LBRY credits were valued at only $5.5 million at the time.
Critics argued that the stark contrast in resources between Ripple and LBRY underscored how well-funded entities can leverage their financial strength in legal battles against regulatory bodies.
Some questioned the SEC’s priorities, criticizing it for targeting a small American company like LBRY while failing to prevent major issues in the cryptocurrency space.
Pro-XRP lawyer John Deaton condemned the SEC’s actions against LBRY, citing the agency’s inability to secure a substantial penalty despite the considerable resources expended.
He labeled the SEC as a “broken, failed, and inept agency.”
Despite Ripple’s legal win, industry observers anticipate that the legal battle with the SEC is far from over.
The penalty phase of the litigation remains contentious, with lawyers predicting a protracted struggle over the appropriate penalties for Ripple’s institutional sales of XRP.
The SEC has signaled its intent to pursue this aspect further, and discussions between the two parties are set to continue until November 9, 2023.
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