Cryptocurrency derivatives exchange Bitnomial has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC), Chairman Gary Gensler, and four other commissioners.
The lawsuit alleges that the agency’s claims of jurisdiction over the company’s XRP futures products are “improper.” It further alleges that the SEC’s classification of XRP as a security led to unreasonable claims on Bitnomial’s futures products.
According to court documents, the SEC alleged that Bitnomial’s proposed XRP futures product violates federal securities laws by treating XRP as an investment contract. According to reports, the SEC claimed that XRP futures must be supervised by both the SEC and the Commodity Futures Trading Commission (CFTC).
Bitnomial disputes this view, stating that it disagrees with the SEC’s classification of XRP as a security. The exchange argues that because XRP is not a registered security, the SEC’s request to register as a national securities exchange is unreasonable and unachievable.
The exchange noted that the Southern District of New York recently rejected the SEC’s interpretation that XRP traded in the secondary market is a security.
Background of XRP legal dispute
The legal battle over XRP’s classification has been a focal point in the cryptocurrency industry since 2020, when the SEC accused Ripple of raising $1.3 billion through the sale of unregistered securities. In 2022, a New York judge ruled that while Ripple’s programmatic sales of XRP (where Ripple did not know the identity of the purchaser) did not violate securities laws, sales to institutional investors were illegal. was lowered.
Despite mixed verdicts, both Ripple and the SEC claimed partial victory. Ripple was fined $125 million, significantly less than the $2 billion proposed by the SEC. The case is still ongoing, and the SEC recently announced its intention to appeal the decision to the Second Circuit Court of Appeals, with Ripple filing a cross-appeal.
The SEC had previously called for interlocutory appeals, a type of appeal that occurs while a case is ongoing, to help speed the resolution of cases. Judge Torres rejected the request, saying the SEC had not shown that such an appeal would “substantially advance the ultimate conclusion of the litigation.”
Bitnomial’s lawsuit against the SEC adds a new layer to the ongoing debate over the regulation of XRP and the SEC’s jurisdiction in the crypto industry. The exchange claims that the SEC’s stance effectively precludes its ability to list the product and treats its XRP futures as securities futures, even though it has already received self-certification from the CFTC. They are resisting the demands of the authorities.
