Bitnomial Sues SEC Over Securities Classification of Its XRP Futures

SUMMARY

Crypto exchange Bitnomial has sued the SEC, challenging its claim that XRP Futures are financial securities.
The SEC has requested Bitnomial to register as a national securities exchange, continuing its dispute with Ripple over XRP’s classification.

Crypto derivatives exchange Bitnomial has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC), its chair Gary Gensler, and four other commissioners. The lawsuit charges that the SEC has “inappropriate” jurisdiction over Bitnomial’s XRP Futures product, which the office claims violate federal securities laws. Bitnomial argued that the SEC considers XRP an investment contract, and hence a security, requiring the XRP Futures product to be regulated by both the SEC and the Commodity Futures Trading Commission (CFTC).

Bitnomial disagrees with the SEC’s classification of XRP as a security and fights that its XRP Futures contracts ought not be subject to security futures regulations. The company has as of now obtained self-certification from the CFTC but alleges the SEC’s necessities, including registering as a national securities exchange, have ruined the listing of XRP Futures. Bitnomial pointed out that XRP is not enlisted as a security, and it has no control to register it, further complicating the SEC’s stance.

Additionally, Bitnomial referenced the Southern District of New York court’s decision, which rejected the SEC’s view of XRP as a security in secondary market transactions. The company argues that this precedent further undermines the SEC’s claims with respect to XRP’s security status. As of now, the SEC has not reacted to Bitnomial’s allegations.

The dispute over XRP’s classification as a security date back to 2020 when the SEC charged Ripple, the issuer of XRP, of raising $1.3 billion through unregistered securities sales. In 2022, Judge Analisa Torres ruled that Ripple’s programmatic sales did not damage securities laws, whereas institutional sales did. Ripple was fined $125 million, much lower than the SEC’s original request of $2 billion. Both Ripple and the SEC have since appealed parts of the ruling, and the legal fight remains ongoing.