The United States Securities and Exchange Commission (SEC) has requested a judge to dismiss a lawsuit filed by an American apparel company aiming to protect itself from possible regulatory action over a previous airdrop.
On July 3, the SEC moved to dismiss a lawsuit submitted on March 25 by Beba and the DeFi Education Fund (DEF). The lawsuit asked a Waco District Court judge to declare that Beba’s self-named token, which had been distributed for free, was not a security.
However, the SEC contends that the lawsuit is “premature and based on a non-existent” policy. Beba’s lawsuit argued that the SEC would classify BEBA tokens as securities and sue the company. They claimed the SEC had unofficially decided, without public notice or comment, that the “vast majority” of digital assets “are securities,” citing 2022 remarks from SEC Chair Gary Gensler.
In its motion to dismiss, the SEC argued that the lawsuit was “premature and based on a non-existent policy that the Commission never adopted and does not actually exist.” The SEC also pointed out that Beba and DEF did not identify “a rule, order, or other Commission action that reflects the alleged policy.”
The SEC’s motion noted that the complaint failed to claim that regulatory action against Beba was “imminent or threatened” or that the SEC had investigated the company.
The SEC has pursued legal action against several crypto companies for purported violations of U.S. securities laws, alleging that numerous cryptocurrencies are unregistered securities.
Beba and DEF argued in their lawsuit that the SEC’s actions violated the Administrative Procedure Act (APA) by circumventing the formal rulemaking process.
However, the SEC maintained that an unwritten policy or threat of enforcement does not constitute a rule under the APA’s definition. The SEC added that it has immunity from lawsuits unless it waives that right through actions such as rulemaking, and Beba and DEF’s claims do not demonstrate that 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 clarified. “A statement from a single Commissioner cannot represent the adoption or existence of a Commission policy, and a Commissioner’s speech does not constitute agency action.”
Cointelegraph reached out to Beba and the DeFi Education Fund for comment but did not receive a response by the time of publication.
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