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How about we devour the SEC in today’s discussion? Again.

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The SEC may appear to many fans of the Netflix series’ “The Last Airbender” as the evil Fire Kingdom ready to wield its power against the rest of the world. To the extent of the majority of crypto founders and companies resorting to suppressed business in fear of the commission’s lurking shadow. But not anymore. 


A Growing Threat to Crypto Companies

The DeFi Education Fund is taking legal action against the SEC for aggressively pursuing offensive lawsuits against cryptocurrency firms. At this point, it’s an eye for an eye as many companies have begun to perceive the commission as a growing threat due to its unpopular crypto regulatory policies that are often not disclosed to the public. 

DEF filed the lawsuit against the commission on Monday on behalf of an apparel company based in Texas, Beba. As per the filing, DEF and Beba are jointly seeking for the court to declare Beba’s upcoming airdrop as legal,  opposed to policies that have previously categorized airdrops as illegal securities. 

By doing so, the DEFI Education Fund hopes to not only protect Beba but also other airdrops that the SEC may classify to be unlawful in future. The apparel company has not yet launched its airdrop. However, its first course of action is being compliant with securities laws to avoid the damages that come with being on the defense bench once the cruel hand of the SEC comes after you.  

How to Sue the SEC

The SEC  has issued “policy statements and an increasing number of enforcement actions, which collectively chill the marketplace and leave market participants struggling to discern the boundaries of this new policy.” The court filing stated, yet the commission has continued to target other firms like Beba such as Tomahawk Exploration and Hydrogen Technology Corporation for distributing free airdrop tokens. This is despite distributions like those demanding no monetary investment from the counterparty, a major tenant of the Howey Test which the SEC utilizes to classify digital assets.

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Furthermore and very central to DEF’s lawsuit against the SEC is that the commission has violated the Administrative Procedures Act (APA) by creating policies that are non-official and mostly not communicated to the public.

“The SEC adopted its new policy without any formal rulemaking process.” the document stated.  For which reason, crypto assets companies have been forced to learn about new regulations through the commission’s often aggressive tactics. 

In defense, the commission has previously asserted it does not require crypto-specific policies to enforce the digital assets industry since most of the existing laws still apply to cryptocurrency offerings.


By using such laws, the commission has gone into a manhunt for initial token distributions like Beba’s that follow an airdropping model even when they are doing it for free and requiring no investment action from recipients.  


Since Beba has no common enterprise between itself and the recipients, as well as no grounds for any reasonable profits from the initiative: DEF is seeking a declaration of lawful activity through the Declaratory Judgement Act so that projects like Beba do not have to forgo their planned initiatives or have to live in fear of non-affirmative action by the commission. 

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