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Home » SEC seeks dismissal of retailers cryptocurrency lawsuit claiming it relies on nonexistent policy
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SEC seeks dismissal of retailers cryptocurrency lawsuit claiming it relies on nonexistent policy

2024-07-04No Comments3 Mins Read
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SEC seeks dismissal of retailers cryptocurrency lawsuit claiming it relies on nonexistent policy
SEC seeks dismissal of retailers cryptocurrency lawsuit claiming it relies on nonexistent policy
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In a recent legal development, the **United States Securities and Exchange Commission (SEC)** has requested that a federal judge dismiss a lawsuit filed by a prominent American clothing brand. The lawsuit in question was an attempt by the company to preemptively protect itself from any regulatory repercussions concerning a previous token distribution event.

On the 3rd of July, the SEC formally sought the dismissal of a lawsuit initiated on March 25 by **Beba** and the **DeFi Education Fund (DEF)**. The legal action, filed in a district court in Waco, asked for a judicial declaration that the complimentary distribution of Beba’s proprietary token did not constitute a security offering.

The SEC, however, contends that the lawsuit is based on a non-existent policy and is thus unfounded. Beba’s legal challenge posited that the SEC would classify **BEBA tokens** as securities and subsequently pursue legal action against the company. This assumption was based on a perceived implicit policy by the SEC, which Beba alleged was indicated by comments made in 2022 by SEC Chair **Gary Gensler**.

In its motion to dismiss, the SEC reiterated that the lawsuit was based on a hypothetical policy that the Commission has neither adopted nor recognizes as actual policy. Furthermore, the SEC pointed out that Beba and DEF failed to pinpoint any specific rule, order, or Commission action that would substantiate the existence of the alleged policy.

The SEC’s motion to dismiss included a section addressing the allegations made by Beba and DEF, as documented in the PACER system.

Additionally, the SEC’s motion highlighted that the complaint did not present any evidence of imminent regulatory action against Beba, nor did it indicate that the SEC had initiated any investigation into the company’s activities.

The SEC has a history of pursuing legal action against various cryptocurrency entities for purported violations of U.S. securities laws, asserting that numerous digital assets are, in fact, unregistered securities.

In their lawsuit, Beba and DEF argued that the SEC’s actions constituted a breach of the Administrative Procedure Act (APA), accusing the regulator of circumventing the formal rulemaking process.

Related to this issue, SEC Commissioner **Mark Uyeda** has criticized the agency’s handling of cryptocurrency-related filings, labeling it as ‘problematic.’

The SEC maintained that the mere possibility of enforcement action or an unarticulated policy does not equate to a formal rule as defined by the APA. The regulator also emphasized its immunity from lawsuits, which remains intact unless explicitly relinquished through a definitive action such as rulemaking. According to the SEC, the allegations made by Beba and DEF do not suffice to demonstrate that the SEC has waived this immunity by adopting a stance on cryptocurrencies.

“The Commission operates based on the collective decision of a majority of its five Commissioners,” the SEC clarified. “A single Commissioner’s statement cannot be construed as the establishment or acknowledgment of a Commission policy, and remarks made by a Commissioner do not constitute official agency action.”

Cointelegraph reached out to both Beba and the DeFi Education Fund for their input but had not received any comments at the time this article was published.

In the realm of legal confrontations, the SEC is gearing up for a formidable clash with the robust legal defenses of the cryptocurrency sector, reminiscent of the epic showdown in ‘Godzilla vs. Kong.’

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