According to the data shared by BitTirbute.com that cryptocurrencies have continued to struggle in court for decades now would be understated.
The crypto market has faced all sorts of legal trouble over the 10+ years that it has been operating. While some were valid, most of them were not. And nowhere is this more apparent than with the LERY case, where the SEC claims that secondary transactions should qualify as primary ones.
This case took on a life of its own throughout the community, with everyone waiting patiently to see who the court would side with. And in a major victory for the crypto community, the court decided in favor of LERY.
The verdict stated that the secondary sales of the LBC coins did not qualify as securities sales. Along with being one of the biggest cases for a crypto firm to win in a long time, it was also a good day for Ripple (XRP), which was at the center of this entire issue.
The company was represented by John Deaton, who is an avid supporter of the crypto market and happens to have a channel named CryptoLawTV. Suffice it to say that they found the right person to represent them in court.
Celebrations Were In Order
Given that this was a major win for the crypto market as a whole, celebrations were certainly in order. Not only did the company certainly celebrate, but John Deaton made a more public celebration.
He made a video for his Twitter page on the same day as the verdict, where he talked about the case and how he was able to shift the tide in favor of ripple in court. Him talking about the case on his channel, and he was talking to the judge about the case.
He specifically talked about how secondary market sales are a serious problem that hurts the original supplier and the customers. So in order to really convince the judge on the issue, he brought up a Lewis Cohen article surrounding this very issue.
The Lewis Cohen Study that Won Them the Case
Of course, this case was only as memorable as the reason for how they were able to win it. According to Cohen, he referred the article to the judge for the case, asking him to read into it since it relayed their specific case.
The paper in question challenges the assumption that cryptocurrencies are indeed not securities. The law firm that carried out this research was DLx Law, funded by Deaton himself. Deaton had submitted the paper all the way back in November of 2022 during the Ripple case.
In fact, the importance of this case cannot be understated. Not only did it help XRP get out of a very serious legal bind, but it was also responsible for creating buzz for the issue in more mainstream forms of media.
Other than just crypto news channels talking about it, various other legal media started discussing it, and various other cryptocurrency influencers also called out to it for sources.
It managed to get 353 downloads in a single month and managed to double that in the following two months.
So Does the Howey Test Apply to Crypto?
The Supreme Court funded the Howey test in 1946, which became their definitive way to test for security. So if an asset manages to fit the parameters of the test, it is a security.
However, the truth is that even though crypto does pass the Howey test, Cohen and his team argue that the Howey test is not the right way to check cryptocurrencies.
Instead, the paper went into extensive detail and proposed an alternative that could help individuals make a better decision for the Howey test as a whole. And if it was enough to convince the judge that secondary sales are not securities, then it was thoroughly checked and vetted.
