- Crypto exchange Bitnomial has become the latest entity to file a lawsuit against the U.S. SEC
- Bitnomial accuses the agency of overstepping its regulatory authority by asserting jurisdiction over XRP futures contracts
- The company argues that XRP is not a security and wants to use the lawsuit to prevent the SEC from blocking the listing of XRP futures on its exchange
Crypto exchange Bitnomial has filed a complaint against the U.S. Securities and Exchange Commission (SEC), claiming that the agency is improperly asserting authority over XRP futures contracts. The exchange argues that XRP, the underlying asset of the futures contract, is not a security and that the SEC’s position contradicts previous court rulings. Bitnomial is asking the court to prevent the SEC from interfering with its listing of the futures contracts, which the Commodity Futures Trading Commission (CFTC) has already approved.
The Hodlonaut Approach
Bitnomial’s lawsuit follows a long-standing battle over the classification of XRP. In the SEC v. Ripple Labs case, the Southern District of New York ruled that XRP transactions on secondary markets were not securities, a ruling that is pivotal for Bitnomial’s case, as the exchange points out that XRP futures involve secondary market transactions:
XRP, the digital token and underlying product here, is not in and of itself a security. Further, XRP is not a security when exchanged anonymously on a secondary market. Therefore, XRP Futures, which would be physically settled through anonymous exchanges of XRP, cannot possibly be security futures.
Bitnomail’s lawsuit is unique in that it is a preemptive strike against the SEC in order to prevent it from being allowed to interfere in the listing of XRP futures, with the exchange wary that the agency may seek to do just that. Bitcoin advocate Hodlonaut used the same process in Norway to prevent Craig Wright from being allowed to sue him for libel in the UK, and was successful.
SEC Still Contends that XRP is a Security
Despite its defeat last year, the SEC maintains its position that XRP is an investment contract and thus falls under its jurisdiction and has appealed the court ruling against it. Bitnomial’s legal team contends that this interpretation has no basis when applied to futures contracts. “Bitnomial cannot comply with the SEC’s demands without fundamentally altering its operations and conceding to unjustified regulatory oversight,” the filing asserts.
Bitnomial’s complaint highlights the conflict between the SEC and CFTC over regulatory control of digital assets. While the CFTC has granted approval for XRP futures, the SEC’s intervention has placed Bitnomial in a legal bind. The lawsuit could set a significant precedent for future cases involving digital asset futures.
