The Securities and Exchange Commission (SEC) has requested a judge dismiss a lawsuit from an American apparel company aiming to protect itself from possible regulatory actions related to a past airdrop.
On July 3, the SEC filed to dismiss a lawsuit from Beba and the DeFi Education Fund (DEF) submitted on March 25.
The suit asked a Waco District Court judge to declare that Beba’s token giveaway was not a security.
The SEC contends the lawsuit is “premature and premised on a phantom” policy.
Beba’s lawsuit alleged the SEC would classify BEBA tokens as securities and initiate legal action, citing that the SEC “has adopted a de facto rule, without notice or comment, that the ‘vast majority’ of digital assets ‘are securities,’” referencing a 2022 statement from Chair Gary Gensler.
In its motion to dismiss, the SEC asserted the lawsuit was “premature and is premised on a phantom, a supposed policy that the Commission never adopted and does not actually exist.”
The SEC highlighted that Beba and DEF did not cite “a rule, order, or other Commission action that reflects the promulgation of the supposed policy.”
Furthermore, the SEC noted the complaint did not demonstrate that regulatory action against Beba was “imminent or threatened” or that the SEC had investigated the company.
“In effect, plaintiffs ask this Court to adjudicate the legality of a policy that does not exist and to block potential future enforcement action that may never occur.”
The SEC has pursued multiple crypto companies for alleged violations of U.S. securities laws, claiming many cryptocurrencies are unregistered securities.
Beba and DEF argued in their lawsuit that this violated the Administrative Procedure Act (APA) as the SEC avoided the rulemaking process.
However, the SEC countered that an unwritten policy or the threat of enforcement does not constitute a rule under the APA’s definition.
The SEC added that it retains immunity from lawsuits unless it waives that right through actions like rulemaking, and Beba and DEF’s claims do not prove the SEC waived its immunity by forming a stance on crypto.
“The Commission acts through a majority vote of a quorum of its five Commissioners,” the SEC explained.
“The statement of a single Commissioner cannot represent the adoption or existence of a Commission policy, and a Commissioner’s speech is not agency action.”
Cointelegraph reached out to Beba and the DeFi Education Fund for comments but did not receive a response by publication time.
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