The SEC wanted to confirm an imprecise injunction, but courts clarified that it only related to direct sales.
As amicus curiae representing tech journalist Naomi Brockwell, Deaton sought clarification regarding LBC secondary market transactions.
Affirmation of an unclear injunction, but judges made it plain that the verdict only applied to direct sales.
Many saw the resolution of a crucial point of argument by attorney John Deaton at the appeal hearing as a triumph for the whole bitcoin industry versus the SEC's overly broad regulation through enforcement.
The SEC received a summary judgement in its favour on November 7, 2022. Without getting into specifics about the transactions, the judgement, which spanned a six-year period, categorised each sale of the LBC token as an investment contract. The SEC planned to advance in its effort to formally recognise the secondary market and bring it under its purview. The SEC has asked the New Hampshire district court judge to uphold the wide, ambiguous injunction prohibiting its sale.
As an amicus curiae advocating for tech journalist Naomi Brockwell, Deaton requested clarity for LBC secondary market transactions because he believed the injunction was ambiguous and overbroad. An amicus curia is a person or organisation that is not a party to a lawsuit but is permitted to assist a court by offering information, expertise, or perception that is pertinent to the problems in the case.
Deaton brought up a report by business contract attorney Lewis Cohen that examined all security claims filed in the US following the SEC vs. W.J. Howey Co. case. No court acknowledged that the underlying asset was security at any point during Cohen's examination of security cases in the United States.
Deaton persuaded the judge that LBC's secondary market dealings weren't securities. The SEC requested an order that does not make a distinction between LBRY, the company's management, and users in an effort to avoid explaining LBC. The court turned to Deaton and stated, "Amicus, I'm going to make it clear that my ruling does not apply to secondary market sales."
The court's ruling in the case was welcomed news by a lot of people in the cryptocurrency community, especially XRP owners. For the sale of XRP coins, the SEC has filed a securities case against Ripple. The recent ruling stating that the secondary market sale of LBC tokens does not qualify as a security may be advantageous for the protracted Ripple case. According to a pro-XRP Twitter account, the ruling also defines XRP as a non-security.
