In a recent development, the **U.S. Securities and Exchange Commission (SEC)** has requested that a federal judge dismiss a lawsuit filed by an American clothing brand. The brand sought legal protection against possible regulatory repercussions concerning a previous token distribution event.
On the 3rd of July, the SEC sought to invalidate a legal challenge initiated on March 25 by **Beba** and the **DeFi Education Fund (DEF)**. The lawsuit, presented to a judge in the Waco District Court, sought a declaration that the promotional tokens distributed by Beba did not constitute securities.
The SEC, however, contends that the lawsuit is based on a non-existent policy and is therefore unfounded. Beba’s legal action suggested that the SEC would classify **BEBA tokens** as securities and potentially pursue legal action against the company. This assumption was based on a perceived implicit policy that the SEC considers most digital assets as securities, a stance seemingly supported by comments made in 2022 by SEC Chair **Gary Gensler**.
In its dismissal request, the SEC maintained that the lawsuit was speculative and based on a supposed policy that the Commission has neither adopted nor recognizes. Furthermore, Beba and DEF failed to pinpoint any specific rule, order, or Commission action that would substantiate the existence of the alleged policy, according to the SEC.
A segment from the SEC’s motion to dismiss outlines the accusations made by Beba and DEF. Source: PACER
The SEC added that the complaint did not convincingly argue that any regulatory action against Beba was either forthcoming or explicitly threatened, nor did it establish that the SEC had commenced an investigation into the company.
The SEC has previously initiated legal proceedings against various cryptocurrency firms for purported violations of U.S. securities laws, asserting that numerous cryptocurrencies are unregistered securities.
In their legal action, Beba and DEF argued that the SEC’s conduct breached the Administrative Procedure Act (APA) by circumventing the formal rulemaking process.
Relatedly, SEC Commissioner **Mark Uyeda** has criticized the agency’s handling of cryptocurrency-related filings as ‘problematic.’
The SEC further argued that neither an informal policy nor the possibility of enforcement action constitutes a formal rule as defined by the APA. The regulator also claimed that it is shielded from lawsuits unless it relinquishes that immunity through a specific act, such as rulemaking. The alleged policy cited by Beba and DEF does not suffice to demonstrate that the SEC has waived its immunity by adopting a stance on cryptocurrencies.
“The Commission operates based on the collective decision of a quorum of its five Commissioners,” the SEC clarified. “A single Commissioner’s statement does not equate to the establishment or acknowledgment of a Commission policy, and a Commissioner’s remarks do not constitute official agency action.”
When approached for comments, Beba and the DeFi Education Fund did not provide any statements before the publication deadline.
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