Bitnomial Sues SEC Over Claim that XRP Futures are Securities

Highlights:

• Bitnomial sues US SEC over XRP futures classification as security futures.
• SEC requires Bitnomial to register as a national securities exchange for futures contracts.
• Ripple challenges sEC Appeal following mixed court rulings on XRP’s status.

On Oct. 10, crypto derivatives exchange Bitnomial sued the United States Securities and Exchange Commission (SEC), challenging the commission’s claim that XRP futures fall under the category of “security futures.”

Bitnomial Exchange, LLC has filed suit against SEC to prevent them overreaching their statutory authority and asserting joint jurisdiction over Bitnomial’s $XRP futures contracts, which are under the sole jurisdiction of the @CFTC.

Read about the complaint here:…

— Bitnomial (@Bitnomial) October 11, 2024

In August, Bitnomial, regulated by the Commodity Futures Trading Commission (CFTC), requested approval to list its XRP-USD futures contract after a court ruling in the SEC lawsuit against Ripple, which determined that XRP was not a security in exchange transactions. 

Despite this, the SEC continued to assert that XRP is a security, leading to Bitnomial’s legal proceedings. The US SEC contacted Bitnomial after its filing, asserting that XRP futures are subject to both SEC and CFTC oversight. 

The SEC also insisted that Bitnomial must register as a national securities exchange before offering XRP futures. However, Bitnomial disagrees, arguing that XRP is not a security and that the CFTC alone should regulate XRP futures, similar to its role with Bitcoin and Ether futures.

 The company said:

“Bitnomial disagrees with the SEC’s view that XRP is an investment contract and, therefore, a security, and that XRP Futures are thus security futures.”

Luke Hoersten, Bitnomial’s CEO, stated that the exchange’s clean record and the distinctive nature of its lawsuit against the SEC bolstered its ability to seek a court ruling. He believes the case could set a legal precedent for how crypto derivatives, such as XRP futures contracts, should be regulated in the US.

Ripple Vs. SEC Case Sparks Wider Disputes

The status of XRP as a security has been a central issue in the Ripple vs. SEC lawsuit. On Thursday, Ripple announced it filed a notice to challenge the SEC’s latest appeal. Both parties will meet in court, and Ripple is ready to fight and win again.

Last July, Judge Analisa Torres of the Southern District of New York ruled that Ripple’s sales of XRP on exchanges were not securities transactions. However, sales to institutional investors were classified as securities. After the court ruling, Ripple Labs was ordered to pay $125 million on August 7 to settle the year-long lawsuit, suggesting a possible case closure if the SEC chose not to appeal.

Both Ripple and the SEC claimed victories, or partial victories, in the case. However, the SEC continued to seek remedies from Ripple, including significant fines and has now filed an appeal to challenge the court ruling. The disagreement over XRP’s classification is ongoing, and these developments are likely to extend the legal battle into next year.

Crypto.com Joins Legal Fight Against SEC

Bitnomial’s lawsuit closely follows Crypto.com’s legal action against the SEC. Crypto.com, a leading global crypto exchange, recently sued the SEC after receiving a Wells notice, which is a formal notification of potential enforcement actions.

Today, https://t.co/pFc4Pz9nFR filed suit against the SEC to protect the future of crypto in the U.S.: https://t.co/kXxyhF7zFe

— Kris | Crypto.com (@kris) October 8, 2024

The company accused the SEC of exceeding its authority by classifying most crypto assets as securities. Since 2023, the SEC has increased its enforcement efforts against the crypto industry, targeting companies like Consensys, Uniswap Labs, and OpenSea. Other entities under scrutiny include major players like Ripple Labs, Binance, and Coinbase, all of which are currently involved in legal disputes with the regulator.