Bitnomial sues SEC over continued claim that XRP is a security

Crypto derivatives exchange Bitnomial has sued the United States Securities and Exchange Commission over the agency’s attempt to “overextend its jurisdiction” to crypto derivatives.

In the lawsuit filed on October 10, Bitnomial accused the SEC of trying to claim regulatory authority over the crypto exchange’s planned offering of XRP Futures contract.

Bitnomial says SEC claimed jurisdiction over its XRP Futures

According to details in the lawsuit, the SEC wants to regulate the XRP US Dollar Futures contract, a product Bitnomial plans to list.

This and similar products fall under the regulatory purview of the US Commodity Futures Trading Commission, the platform added.

In its suit, the exchange contends that XRP Futures does not fall within the securities watchdog’s statutory authority.

“Bitnomial Exchange self-certified XRP Futures with the CFTC on August 9, 2024.

Thereafter, the SEC contacted Bitnomial Exchange about the contract, contending that the derivative is a security future, and that the SEC has joint jurisdiction over it,” the company said in a press release.

The SEC sued Ripple, the company behind XRP in December 2020 over sales of unregistered securities.

Specifically, the regulator alleged XRP was a security. After a long legal tussle, Judge Analisa Torres at the US District Court of the Southern District of New York ruled that XRP is not a security.

The landmark ruling boosted sentiment and has seen at least two companies file proposals to list XRP spot exchange-traded funds.

Since the court determined that the XRP cryptocurrency isn’t inherently a security, Bitnomial argues that the SEC cannot then refer to the XRP Futures contract as a security futures offering.

“Despite their recent loss in court, the SEC still contends that XRP is a security,” Bitnomial noted.

The lawsuit against the SEC and its commissioners seeks a formal judgement against the regulator’s overreach and to protect the market.

Notably, the exchange notes it’s yet to list the futures product and that the SEC has not accused it of wrongdoing.

SEC’s XRP appeal

Bitnomial filed its lawsuit against the SEC, led by Chair Gary Gensler, a few days after the regulator indicated it would appeal Judge Torres’ ruling. That notice of appeal spooked XRP holders.

It also triggered a wave of criticism from across the crypto industry.

However, Ripple has since filed a notice of a cross-appeal.

Stuart Alderoty, chief legal officer of Ripple, commented on X:

The SEC lost on all key points—that’s why they appealed. Today, Ripple filed a cross-appeal to ensure nothing’s left on the table, including the argument that there can’t be an “investment contract” without there being essential rights and obligations found in a contract.

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Alderoty highlighted that the SEC already “unsuccessfully tried to take an early appeal” and failed.

This regards the ruling that XRP sales on crypto exchanges and distributions were not securities.

“They’ll likely go after these again – and they will lose on both again,” the Ripple CLO noted.

Earlier this week, on Oct. 8, crypto exchange Crypto.com sued SEC following the regulator’s issuance of a Wells notice against it.

Other companies to file cases against the regulator in recent months include Consensys and US-based crypto startup Lejilex.

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