DeFi Education Fund, Apparel Firm Sue SEC Over Unwritten Airdrop Securities Rule
Crypto advocacy group DeFi Education Fund and Texas-based apparel firm Beba filed a lawsuit against the Securities and Exchange Commission (SEC) on Monday. They aim to establish that airdrops should not be classified as securities.
The parties criticized the SEC’s “aggressive approach” to regulating token creators and other participants through enforcement actions.
Thus, Beba is pursuing a court order to safeguard its business from the SEC’s “unlawful” ongoing enforcement efforts.
“Every single one of us in this industry, including the DeFi Education Fund, is harmed by their overreach,” said DeFi Education Fund CEO Miller Whitehouse-Levine. “We are asking the court to put an end to the SEC’s arbitrary abuse of its authority.”
The parties allege that the SEC specifically targets digital asset companies. The agency enforces an unwritten rule that categorizes most digital assets, including airdrops, as securities, per the suit.
Airdrops involve distributing free tokens as part of a marketing strategy. Beba is seeking a court ruling that its $BEBA tokens do not qualify as investment contracts. It also seeks to establish that distributing the tokens for free does not constitute a securities transaction.
Further, the firm specified that it distributes $BEBA tokens at no cost to potential customers. These can then be used to access exclusive products at discounted rates.
“Because $BEBA tokens were given away for free, there was no ‘investment of money’ by recipients of the airdrop, a necessary prong of the Supreme Court’s test for determining whether an investment contract exists,” Beba states.
Now, both parties are urging the court to enforce the Administrative Procedure Act on the SEC. This act mandates that federal agencies
