Beba and Defi Education Fund Initiate Legal Action Against SEC Regarding Airdrop Policies
Beba and Defi Education Fund Initiate Legal Action Against SEC Regarding Airdrop Policies
BollywoodFever, March 26: The Texas-based apparel company Beba and the Defi Education Fund (DEF) have filed a lawsuit against the U.S. Securities and Exchange Commission (SEC), accusing the regulatory body of bypassing proper procedures under the Administrative Procedure Act in implementing broad cryptocurrency regulations.
Moreover, the lawsuit seeks to establish that tokens distributed through airdrops to users should not be classified as security transactions.
Beba and the Defi Education Fund Challenge SEC’s Stance on Airdrops and Cryptocurrency Regulations
The lawsuit, filed in the Western District of Texas, contests the SEC’s stance on airdrops, which are a prevalent method for distributing tokens in the cryptocurrency sector.
The contention revolves around the distribution of the BEBA token by Beba, arguing such distributions do not constitute a security transaction.
This argument hinges on the premise that these transactions lack an investment of money, failing the Howey test—a criterion for determining if a transaction is considered an investment contract.
Furthermore, the lawsuit criticizes the SEC for its altered approach towards cryptocurrencies, claiming that any significant policy shifts require a formal rulemaking process as dictated by the Administrative Procedure Act. This process necessitates transparency, clarity, and public participation, which the plaintiffs assert was not followed.
The filing criticizes the SEC for leaving token creators vulnerable to actions they had no part in and preventing individuals from seeking judicial review of the SEC’s policies. This, according to the lawsuit, allows the SEC to obscure its overreach of statutory authority.
This legal challenge against the SEC by Beba and DEF adds to a growing list of litigations accusing the commission of overstepping its regulatory boundaries concerning cryptocurrency assets, including a notable lawsuit by Lejilex and the Crypto Freedom Alliance of Texas earlier in February, which also targeted the SEC’s asserted regulatory jurisdiction over cryptocurrencies.
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