Community Reacts to SEC Dropping XRP Case and LBRY Shutdown
The cryptocurrency community has been buzzing with discussions about two major developments. First, the U.S. Securities and Exchange Commission (SEC) announced its intention to dismiss all claims against Ripple CEO Brad Garlinghouse and executive chair Chris Larsen, marking a significant legal win for Ripple. Second, the blockchain platform LBRY revealed that it would be shutting down due to debts owed to the SEC, its legal team, and a private debtor.
Ripple’s Legal Victory
Ripple’s legal battle against the SEC has been closely watched by cryptocurrency enthusiasts. The SEC filed a civil case against Ripple in late 2020, accusing the company of securities law violations. However, on October 19, the SEC made the surprising announcement that it would be dropping all claims against Ripple’s executives.
This news was met with celebration by the XRP community, who viewed it as a significant win for Ripple. However, some community members also expressed concern about the broader impact of the SEC’s actions. Influencer Ashley Prosper remarked, “Whilst we celebrate another massive win for Ripple, let’s not forget the damage the SEC has already done to crypto.”
On the same day as Ripple’s legal victory, LBRY, a blockchain file-sharing and payment network, announced that it would be shutting down its operations. LBRY cited debts owed to the SEC, its legal team, and a private debtor as the reasons for its closure.
LBRY had been embroiled in a lawsuit with the SEC since March 2021, facing similar allegations of securities law violations. Despite the SEC reducing the penalty against LBRY, the company ultimately decided not to continue its appeal and chose to shut down. This news saddened many in the cryptocurrency community, who saw LBRY as a valuable alternative to centralized video platforms like YouTube.
Differing Capital and Legal Ramifications
One notable difference between Ripple and LBRY is the difference in their market capitalization. Ripple’s XRP is the fifth-largest cryptocurrency, valued at $27 billion, while LBRY’s native token has a market cap of approximately $5.5 million. Community members pointed out that Ripple’s financial resources allowed them to fight the SEC, while LBRY lacked the means to continue its legal battle.
Moreover, some viewed the cases of Ripple and LBRY as illustrations of how powerful entities can use the courts to their advantage. A commenter on X stated, “Ripple would have been LBRY if they didn’t have the funds to fight the SEC.” This sentiment reflects concerns about the potential for regulatory overreach and its impact on smaller cryptocurrency projects.
Implications and Further Litigation
While Ripple’s legal win against the SEC is a significant milestone, experts believe that the legal battle is far from over. Industry observers anticipate further litigation in the penalty phase to determine the appropriate penalty for Ripple’s institutional sales of over $700 million worth of XRP.
This expectation of continued legal proceedings was highlighted by Fox News journalist Eleanor Terrett, who stated, “Ripple should expect a big fight as the SEC will still want a substantial amount for bragging rights.” The SEC and Ripple are set to confer and propose a schedule for further litigation regarding the Section 5 violations related to Ripple’s institutional sales.
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