DeFi fund, Texas apparel company sue to defend airdrop against SEC

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The Texas-based Beba clothing company has issued tokens in an airdrop and has sued the U.S. SEC to prevent it from taking action against it.

Beba, a Texas clothing company run by African immigrants, and the DeFi Education Fund have teamed up to defend the company’s recent airdrop of BEBA tokens against potential actions by the United States Securities and Exchange Commission by seeking a declaratory judgment from the U.S. District Court for Western Texas. In a suiton March 25, the plaintiffs also asked the court for clarification of the limits of the SEC’s authority in light of the Administrative Procedures Act .

Beba created 100,000 BEBA tokens and has airdropped 60,880 of them so far, according to the suit. The tokens are intended to be freely traded and are expected to increase in value. The SEC “will take the position that BEBA tokens are investment contracts and that the airdrop is a securities transaction subject to registration requirements under the Securities Act of 1933,” it continued.

Nonetheless, the plaintiffs argued that token recipients do nothing to become eligible for the airdrop or take actions that involve no “meaningful consideration, like ‘following’ Beba on social media.” Therefore, there is no common enterprise in the airdrop. Nor did Beba promise to take measures to increase the token’s value. Therefore, the airdropTokenholders are eligible for a discount on an item sold by Beba, however. It compared that offer to a customer loyalty program.

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