Beba, a Texas-based clothing company, and the DeFi Education Fund filed a lawsuit against the SEC in March over the classification of crypto assets and the SEC’s failure to impose clear regulatory rules. Crypto industry and venture capital firms filed supporting statements in the case on October 28.

Companies supporting this lawsuit include Coinbase, Andreessen Horowitz, Multicoin Capital, Paradigm, Union Square Ventures and Variant. Leading names in the industry criticize the SEC’s threat of sanctions without providing specific rules and guidelines.

“The SEC errs in ignoring the harm that companies like Beba face due to sanctions threats,” the Amicus brief said.

The main argument of this case is to obtain a preemptive ruling that the SEC cannot enforce its “unwritten policy” of classifying most digital assets as “investment contracts.”

In particular, the issue of free airdrop of Beba’s BEBA tokens stands out. The SEC claims that these tokens are investment contracts and states that this violates the Securities Act of 1933.

SEC, which has chosen to classify the distribution of crypto assets through airdrops as investment contracts, has made this threat concrete by filing at least four enforcement cases to date.

The briefing argues that this approach by the SEC creates uncertainty for many companies operating in the sector, therefore harming the sector without clear regulations.

The SEC asked the court to dismiss the case in July. Claiming that the case was filed on the grounds of “an early and fictitious policy”, the SEC claimed that Beba did not present a clear rule or order regarding the policy it opposed when filing the lawsuit.

In contrast, the amicus brief filed by crypto industry representatives stated that the plaintiffs presented sufficient justification for the threat of sanctions imposed by the SEC.

The brief argues that the SEC’s motion to dismiss should be denied, arguing that the plaintiffs face real harm and a credible threat of enforcement from the SEC.

Other organizations supporting this lawsuit include the Texas Blockchain Council and Investor Choice Advocates Network. These organizations also stated in their own amicus briefs that the SEC “failed in its responsibility to provide necessary regulatory guidance to the public.”

They argued that the SEC left the industry in a difficult situation with regulatory actions without providing guidance, and stated that clear rules should be established.

Crypto policy think tank Coin Center stated in a separate briefing on October 22 that DeFi Education Fund was also right to file a lawsuit against the SEC.

Coin Center stated that instead of providing a clear regulatory framework, the SEC chose to impose public policies through the courts and did not offer a political solution to the affected parties.

According to Coin Center, this approach of the SEC eliminates the chance of organizations such as DEF to seek solutions outside the courts and leaves only the judicial remedy open for institutions operating in the sector.

In sum, Coinbase and other crypto industry players argue that such lawsuits are necessary on the grounds that the SEC fails to provide regulatory guidance and ambiguously classifies most digital assets as securities.