The DeFi Education Fund and Texas-based apparel company Beba have filed a lawsuit against the U.S. Securities and Exchange Commission demanding a legal declaration that their $BEBA token airdrops are not securities.

The legal action seeks to resolve the contentious issue of crypto token regulation and compel the SEC to follow the Administrative Procedure Act in its rule-making.

This case could potentially establish a legal precedent for the classification of crypto tokens, highlighting the ongoing dispute between the cryptocurrency industry and regulatory authorities.

The lawsuit centers on the argument that the $BEBA token, which holders can use to purchase exclusive merchandise from Beba’s online store, does not fulfill the Howey Test’s criteria for an investment contract.

The DeFi Education Fund and Beba claim that token airdrops are distributed for free, do not involve a common enterprise, and do not offer profits based on the efforts of third parties.

With the SEC given a 60-day window to respond, the commission has yet to issue a statement regarding the lawsuit.

The SEC’s current regulatory stance has been met with criticism from the crypto community, which accuses the agency of lacking transparency in rule-making and excessively relying on enforcement actions to establish policy.