Mati Greenspan, the founder of Quantum Economics, has raised concerns about the potential repercussions of the SEC’s lawsuit against the decentralized content platform LBRY on the entire cryptocurrency industry.
On March 29, the SEC filed a complaint against LBRY, alleging that the platform had offered and sold millions of dollars’ worth of unregistered securities through its LBRY Credit tokens since 2016. LBRY disputes these claims, arguing that their tokens are utility-focused rather than speculative.
In his latest newsletter, ominously titled “Don’t let them kill crypto,” Greenspan warns that a successful SEC lawsuit against LBRY could have far-reaching consequences for cryptocurrencies:
“Should the court side against LBRY, it would literally put the future of all cryptocurrencies, including Bitcoin and Ether, in question.” Greenspan highlights that the U.S. has lagged in crypto regulation and cautions that this case could set a precedent for classifying “multifaceted programmable money” as securities.
“Judges generally take their guidance from previous rulings on similar cases, so a negative ruling here could make it easier for them to kill off any project which utilizes crypto tokens. DeFi, non-fungible tokens (NFTs), smart contracts, and just about everything except possibly stablecoins.” Greenspan argues that LBRY’s only mistake was to establish itself in the U.S., and he criticizes the U.S. for its “backwards approach to forward-looking innovation.”
While Greenspan, who is based in Israel, does not believe an SEC victory would halt innovation in the global crypto industry, he does think it would have a stifling effect in the U.S.:
“It will simply drive it out of the United States. Projects like this are flourishing in Europe and some parts of Asia and the technology continues to progress globally. America is being left behind.” LBRY contests the SEC’s accusations, stating that LBRY Credits are used for tipping, publishing, purchasing, and boosting content on the platform. The company emphasizes that it has never promoted LBRY Credits as an investment and has consistently discouraged speculative purchases.
Greenspan urges his newsletter readers to support LBRY by writing to Congress or visiting helplbrysavecrypto.com to learn more about what he calls the “idiotic actions of American regulators.”
Despite his warnings, Greenspan remains optimistic:
“Hopefully, the judge will be able to see the blatant holes in the SEC’s case. LBRY seems to have some very sound arguments, so I’m quite optimistic.”