The United States Security Commission (SEC) won its case against blockchain-based file-sharing and payment network LBRY in district court in New Hampshire on Nov. 7 when that court decided to grant an SEC request for summary judgment filed in May. The case garnered lots of commentary on its own and in relation to the ongoing Ripple case.

LBRY operates a digital content network. The Odysee video sharing website is its best known app. The network uses LBRY Credit (LBC) to reward users for performing tasks, referring new users, contributing to projects and publishing content, according to the LBRY website. LBC can also be mined or purchased.

The SEC filed a complaint against LBRY in March 2021, claiming that LBRY was selling an unregistered security. The SEC sought a permanent injunction against the sale of the tokens, disgorgement of all funds received with interest and civil penalties. It did not allege fraud or charge any individuals in the case, however.

LBRY argued that LBC was not intended for investment purposes, but had a use on the LBRY blockchain from the moment of its launch. Something with a function is a commodity, not a security. LBRY further argued that it was not given fair notice that its assets were subject to securities laws.

The court’s dismissal of the fair notice claim was simple and direct:

In other words, LBRY should have been familiar with the Howey test, which is the standard for defining a security. Regarding LBRY’s claim about the token’s investment uses, the court found that:

That is to say that LBC does not pass the Howey test. And again, a disclaimer has been shown to be inadequate protection. The court takes the principle further, however, noting, “Nothing in the case law suggests that a token