Leading Crypto Lawyers Split Over Judge’s Ruling in SEC v. LBRY

• Prominent crypto Lawyers John E Deaton and Bill Morgan trade opposing views on the recent ruling in SEC v. LBRY.
• Judge Paul J. Barbadoro ruled that secondary sales of LBRY are not securities.
• Morgan contends that the ruling plays into the SEC’s hands, while Deaton calls it “better than nothing”.

John E Deaton, an XRP lawyer and managing partner of Deaton Law Firm shared an optimistic take on a recent ruling in the SEC-LBRY case. The XRP attorney argued that Judge Paul J. Barbadoro’s decision to exclude the secondary sale of the LBRY token from the category of security, is “better than nothing”.

Previously, Deaton shared a Twitter thread detailing his request to the judge “to clarify that the token itself is not the security”. However, Deaton explained that the judge rejected his request, retaining his “judicial restraint”. Instead, the judge ruled, “I take no position on whether the registration requirement applies to secondary market offerings of LBC by persons or entities not subject to the injunction”.

Deaton asserted that the judge was “super conservative” and his decision has partially silenced the Securities and Exchange Commission (SEC) by restricting the agency from proving LBRY’s secondary sale as security. While Deaton remained sanguine about the judge’s position, another renowned lawyer, Bill Morgan shared his disappointment with the case’s current status. 

Morgan contradicted Deaton’s assertions, claiming that the judge’s ruling was not better than nothing. He added:

It is exactly what the SEC wants. It does not want the issue of secondary market sales or the issue whether the tokens themselves are securities decided until decisions are made in the cases against the exchanges.

In response to Morgan’s tweet, Deaton reiterated that though the case’s current status could not be celebrated as a “sweeping victory by any means”, it is preferable to an unfavorable ruling. Comparing the case with the summary judgment in SEC v. Coinbase, where the court did not distinguish between direct sales and secondary sales, Deaton argued that Judge Barbadoro’s ruling is better. While the summary judgment in the SEC-Coinbase case found all sales to constitute securities, Judge Barbadora’s statement excluded LBRY’s secondary sale from the category, providing some solace for the community.

Deaton, being an amicus, is well-known for providing his followers with updates on XRP’s legal battle against SEC, where he often criticizes and attacks the regulators. Recently, the lawyer chastised the commission for its charges against the leading exchanges Binance and Coinbase, calling the Chair Gary Gensler a “quintessential bully”.