Bitnomial Exchange, LLC has foot The SEC and its commissioners sued on October 10, challenging the SEC’s claim that XRP is a security. The complaint, filed in the U.S. District Court for the Northern District of Illinois, seeks declaratory relief and injunctive relief against the federal regulator’s attempt to exercise jurisdiction over digital asset futures that Bitnomial says should be regulated exclusively by the Commodity Futures Trading Commission (CFTC). . .
Bitnomial files lawsuit against SEC over XRP classification
Bitnomial, a specified contracts market approved by the Commodity Futures Trading Commission (CFTC), has been in the spotlight after the Securities and Exchange Commission (SEC) objected to its plans to list XRP futures. “The SEC asserts jurisdiction over a product that is already regulated and subject to the exclusive jurisdiction of the CFTC,” according to the complaint. The SEC’s intervention came after Bitnomial obtained self-certification from the CFTC to list futures contracts, scheduled to begin trading on or after August 13, 2024.
“After filing its self-certification with the CFTC, but before Bitnomial listed XRP futures for trading, the SEC contacted Bitnomial to discuss the prospective listing. In discussions with Bitnomial, the SEC asserted that Bitnomial would violate securities laws federal if Bitnomial proceeds with its pending listing of XRP futures pursuant to its CFTC self-certification,” the complaint reveals.
The SEC assumed in its exchange with Bitnomial that the cryptoasset is an investment contract, and therefore a security. “The SEC has confirmed that XRP futures contracts are securities futures contracts subject to joint jurisdiction between the SEC and the CFTC. The SEC has also confirmed that Bitnomial is required to comply with a set of additional SEC requirements before listing these futures contracts, including the important task of registering as a National Stock Exchange (“NSE”) and submitting to the jurisdiction of the SEC,” Bitnomial wrote.
The exchange opposes this classification, asserting that summary judgment for the Southern District of New York effective July 13, 2023, by Judge Analisa Torres has rejected the SEC’s position that the token itself is a security in secondary market transactions.
Bitnomial’s legal counsel says: “Bitnomial disagrees with the SEC’s view that XRP is an investment contract, and therefore a security, and that XRP futures contracts are therefore safe futures contracts.” They also assert that complying with the SEC’s demands would be unfeasible, as it would require Bitnomial to register as a national securities exchange, a process that would impose undue regulatory burdens and costs on the company.
Bitnomial is asking the court to declare that the “Bitnomial is seeking this announcement prior to listing the contract contrary to the SEC’s interpretation of the law, which would expose Bitnomial to SEC enforcement,” the company wrote.
The lawsuit comes as the SEC filed a motion to appeal Judge Torres’ final ruling on October 2. The SEC has not yet said what it plans to resume. On October 8, cryptocurrency exchange Crypto.com also filed a lawsuit against the SEC after it received a notice from Wells. Notably, Bitnomial’s complaint comes after Canary Capital filed an application with the SEC on October 8 to launch an XRP exchange-traded fund (ETF), just days after a similar application from Bitwise.
At press time, XRP was trading at $0.5344.
Featured image created with DALL.E, a chart from TradingView.com