The SEC has been accused by the DeFi Education Fund (DEF), a crypto agency that supports educational programs and development in decentralized finance (DeFi), of targeting digital asset entities with unlawful strategies. DEF has filed a complaint against the United States Securities and Exchange Commission, challenging the watchdog’s methods of enforcing regulations. DEF has joined forces with Beba, an American apparel company that argues that the SEC’s claim that its token is an investment contract is false.
The case has been filed in the U.S. District Court for the Western District of Texas, where the DeFi Education Fund and Beba are challenging the SEC’s pattern of regulating by enforcement. They are urging the court to hold the agency accountable to the Administrative Procedure Act, which requires federal agencies to adopt new rules in writing and through an open process with opportunity for public notice and comment so that people can weigh in on and be aware of the rules they’re expected to follow.
The court filing also mentions $BEBA tokens, which the SEC has deemed as investment contracts. The filing argues that the regulator unlawfully pursues a strategy of targeting businesses in the digital asset industry after adopting an unwritten rule that most digital assets are securities, including those distributed by airdrop for free. Beba claims that they airdropped the $BEBA tokens as a marketing tool to improve consumer interaction with their business, increase brand awareness, and reach a wider community of potential customers. Therefore, Beba is urging the court to protect its business by ruling that $BEBA tokens are not investment contracts and that a free airdrop of a $BEBA token is not a securities transaction.
Tags: Regulation, SEC
