Crypto Exchange Bitnomial Challenges SEC's Jurisdiction Over XRP Futures

In a bold move, the 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 exchange alleges that the SEC's claim of jurisdiction over its XRP Futures product is "inappropriate" and that the agency's classification of XRP as a security has led to unjust requirements for Bitnomial's futures product.

Bitnomial Disputes SEC's Oversight of XRP Futures

Bitnomial's Legal Challenge to the SEC's Jurisdiction

Bitnomial's lawsuit challenges the SEC's assertion that its proposed XRP Futures product violates federal securities laws by treating XRP as an investment contract. The exchange argues that because XRP is not a registered security, the SEC's demands for Bitnomial to register as a national securities exchange are both unreasonable and unattainable.Bitnomial's legal team points to a recent court ruling in the Southern District of New York, which rejected the SEC's interpretation that XRP is a security when traded on secondary markets. This ruling has significant implications for the ongoing legal battle over XRP's classification, and Bitnomial is leveraging it to bolster its case against the SEC's jurisdiction.

The SEC's Claim of Dual Oversight

According to the court document, the SEC has asserted that Bitnomial's XRP Futures product must be supervised by both the SEC and the Commodity Futures Trading Commission (CFTC). Bitnomial, however, disputes this view, stating that it does not agree with the SEC's classification of XRP as a security.The exchange argues that the SEC's demand for dual oversight effectively blocks its ability to list the XRP Futures product, despite Bitnomial already receiving self-certification from the CFTC. This legal battle highlights the ongoing tension between the SEC and the crypto industry over the regulation of digital assets and the scope of the agency's jurisdiction.

Bitnomial's Stance on XRP's Classification

At the heart of Bitnomial's lawsuit is the exchange's disagreement with the SEC's classification of XRP as a security. Bitnomial maintains that because XRP is not a registered security, the SEC's demands for it to register as a national securities exchange are both unreasonable and unattainable.This stance aligns with the recent court ruling in the Southern District of New York, which rejected the SEC's interpretation that XRP is a security when traded on secondary markets. Bitnomial is leveraging this decision to bolster its case against the SEC's jurisdiction over its XRP Futures product.

The Ongoing Legal Battle Over XRP

The legal dispute over XRP's classification has been a focal point in the crypto industry since 2020, when the SEC accused Ripple of raising $1.3 billion by selling unregistered securities. In 2022, a New York judge ruled that Ripple's programmatic sales of XRP did not violate securities laws, while institutional sales were deemed unlawful.Despite the mixed ruling, both Ripple and the SEC claimed partial victories. Ripple was fined $125 million, well below the SEC's proposed $2 billion. The legal case remains active, with the SEC recently announcing its intention to appeal the decision to the Second Circuit Appeals Court, while Ripple has filed a cross-appeal.Bitnomial's lawsuit against the SEC adds another layer to the ongoing debate over the regulation of XRP and the SEC's jurisdiction in the crypto industry. The exchange is pushing back against the agency's demand to treat its XRP Futures as security futures, arguing that the SEC's stance effectively blocks its ability to list the product despite already receiving self-certification from the CFTC.