The crypto-backed agency alleged that the SEC is targeting digital asset entities with unlawful strategies.
The DeFi Education Fund (DEF), a crypto agency that supports educational programs and development in decentralized finance (DeFi), has filed a complaint against the United States Securities and Exchange Commission (SEC), challenging the watchdog’s methods of enforcing regulations.
DEF Joins Hands With Beba to Sue the SEC
DEF made the move alongside Beba, an American apparel company that argued that the SEC’s claim that its token is an investment contract is false.
In the case filed in the U.S. District Court for the Western District of Texas, the DeFi Education Fund and Beba challenge the SEC’s pattern of regulating by enforcement. They urged the court to hold the agency 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 crypto industry is facing an existential threat from an overzealous regulator who is abusing its power by targeting our industry through unending aggressive enforcement actions. It’s time for the court to put an end to it,” they said.
SEC Accused of Targeting Crypto Entities
Furthermore, the court filing mentioned $BEBA tokens, which the SEC deemed as investment contracts, arguing 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.
The apparel company claimed that they airdropped the $BEBA tokens as a marketing tool to improve the way that consumers interact with Beba’s business, thereby increasing brand awareness and reaching a wider community of potential customers. Therefore, Beba urged the court to protect its business by ruling that $BEBA tokens are not investment contracts and a free airdrop of a $BEBA token is not a securities transaction.
“The SEC’s unjust and ad-hoc enforcement campaign threatens businesses of all kinds, including companies like Beba who want to be able to use innovative technologies for legitimate business reasons. Every single one of us in this industry, including the DeFi Education Fund, is harmed by their overreach. We are asking the court to put an end to the SEC’s arbitrary abuse of its authority,” said Miller Whitehouse-Levine, CEO of the DeFi Education Fund.
