Uncertainty Prevails: Ripple’s Anticipation Heightens as Judge Delays Ruling on LBRY Credits’ Security Classification

Ripple‘s anticipation may continue as a judge in a United States district court refrains from making a definitive ruling on whether the secondary sale of LBRY Credits (LBC) should be classified as a security.

On July 11th, Judge Paul Barbadoro of the U.S. District Court for the District of New Hampshire delivered this decision in a case brought forth by the United States Securities and Exchange Commission (SEC) against LBRY, the decentralized content platform.

This ruling could potentially serve as a legal precedent for Judge Analisa Torres of the same district court who is soon to preside over the SEC’s case against Ripple.

Judge Barbadoro explicitly stated in his ruling that he abstains from expressing a viewpoint on whether the registration requirement should be applied to secondary market offerings of LBC. It is worth noting that a secondary market involves the buying and selling of securities among traders, whereas a primary market entails direct trading from the issuing company.

John Deaton, a U.S. attorney representing numerous XRP tokenholders, reached out to Judge Barbadoro to seek clarification regarding the classification of LBC as a security. Deaton mentioned on July 11th that Judge Barbadoro chose to uphold his “judicial restraint,” without providing further details.

Barbadoro’s recent stance represents a complete reversal of his previous conclusion during a January appeal hearing, where Deaton successfully argued that the secondary sale of LBC does not qualify as a securities offering. The judge from New Hampshire clarified during the appeal hearing that LBC is only considered a security when sold directly.

Furthermore, the SEC acknowledged that secondary market LBC sales do not constitute a security.

While the SEC initially obtained a summary judgment in November 2022, it chose to settle for $22 million during the appeal hearing on January 30th.

In May, the SEC revised its requested fine to $111,000, citing LBRY’s depleted financial status. Jeremy Hogan, a Ripple advocate and attorney based in the United States, informed Cointelegraph that Judge Analisa Torres is likely to deliver her ruling within the next few months.

“We can expect to have a comprehensive understanding within the next two months, and unless Ripple secures a complete victory, we will know the specifics before the end of the year. In the event that the details are unfavorable, we can anticipate lengthy appeals that will prolong the process.”

“However, this will have little impact on a typical XRP holder,” he added.