Texas-based apparel company Beba and the cryptocurrency lobbying group DeFi News Education Fund have withdrawn their 2024 lawsuit against the U.S. Securities and Exchange Commission (SEC) due to a recent shift in the agency's stance on cryptocurrencies.
The lawsuit accused the SEC of adopting its digital asset enforcement policy without formal notice and comment rulemaking, in violation of the Administrative Procedure Act.
The complaint also noted that SEC Commissioner Peirce hinted in May that the SEC was considering creating an exemption framework for airdrops, as well as an executive action released by the White House in January encouraging the SEC to establish a “safe harbor” for certain airdrops.
In a post on X on Friday, the DeFi News Education Fund stated, “Given the excellent work done by the SEC’s crypto working group and the recent speeches suggesting a change in the Commission's stance on free airdrops, we have decided to temporarily pause the lawsuit, with the option to refile if necessary in the future.”
The team added, “The DEF team expects the SEC’s crypto working group to resolve the airdrop issue soon, which is also the core of this lawsuit.”
The case has been temporarily dismissed without prejudice.
This withdrawal is unconditional, preserving the rights of Beba and the DeFi News Education Fund to refile the lawsuit if necessary.
“If the anticipated guidance does not materialize or is insufficient to meet the needs, the plaintiffs reserve the right to refile,” the attorneys representing both parties wrote in court documents.
The SEC's Evolving Stance on Cryptocurrencies
Under former SEC Chair Gary Gensler, the SEC faced strong criticism from the crypto industry for allegedly making policy through enforcement actions and legal settlements rather than through formal rulemaking.