Numerous organizations and firms in the cryptocurrency space have come together to support a lawsuit initiated by a Texas-based apparel company and the DeFi Education Fund against the U.S. Securities and Exchange Commission (SEC). The suit challenges the SEC’s interpretation of cryptocurrency assets and highlights the absence of clear regulations. Prominent names in the industry, including Coinbase and various venture capital firms, have expressed their backing through an amicus brief submitted on October 28.
The brief contends that the SEC overlooks the detrimental impacts its enforcement actions have on businesses like Beba LLC, which are facing uncertainty due to the current regulatory climate. It points out that the SEC has sent a strong message of potential enforcement by initiating multiple actions that categorize the airdrop of digital assets as “investment contracts,” thereby classifying them as securities transactions.
Filed in March, the lawsuit aims to achieve a declarative judgment asserting that the SEC’s unwritten policy, suggesting that most digital asset transactions should be treated as securities, is not enforceable. The case notably revolves around the airdrop of Beba’s digital token, BEBA, which the SEC has labeled as violating the 1933 Securities Act.
In response to the lawsuit, the SEC requested its dismissal, arguing that the case was based on an unfounded premise and lacked clarity on the alleged policy violations. However, supporters of the suit argue that it has effectively demonstrated a valid concern regarding the significant risk of enforcement actions and associated harm.
Additionally, other organizations like the Texas Blockchain Council emphasized that the SEC has been engaging in numerous enforcement actions while failing to provide essential regulatory clarity through established rulemaking processes. A separate amicus brief by a crypto policy think tank also supported the notion that the current regulatory approach leaves entities with few avenues to address their grievances, forcing them to rely on the judicial system.
